Production Functions with Electricity: The Industrial Level

Abstract

As we mentioned in Chap. 1, the state economy is consisted of three industries, that is, primary industry, secondary industry, and tertiary industry. From the macroscopic perspective, the industrial production functions with electricity include the following: (1) the E-Q function, the product function on industrial electricity consumption and its product quantity; (2) the E-RE function, the product function on industrial electricity consumption and its revenue of products sale; (3) the E-PF function, the product function on industrial electricity consumption and the profit, which is the sum of the profit of all economic units in the industry; and (4) the E-V function, the product function on industrial electricity consumption and the value added, which is the sum of the value added of all economic units in the industry. In this chapter, we will discuss these production functions with electricity. It will also explain how their characteristics can be transferred from enterprises to sectors and then finally to industries. This chapter is a preparation for a later discussion on the relationship between electricity and gross domestic product (GDP). We will first introduce the basic theory of the industrial production functions with electricity. And then, case studies for China and the United States have been showed in this chapter.