Input Substitution Research Articles

Procuring Substitutes with (Fine-Tuned) First-Price Auctions

Suppose a firm uses inputs that are substitutes. Each input is supplied by a single contractor. The firm would like to make suppliers compete. However, since inputs are imperfect substitutes, resorting to winner-take-all competition may not be an attractive option. We allow the firm to use a modified first-price auction. It announces demand functions for each input and contractors simultaneously bid unit prices and sell according to announced input demands. We show that the firm has an incentive to announce demands that overstate input substitutability and understate its willingness to pay. In the extreme inputs are treated as perfect substitutes even if goods are independent.

Microwave-assisted synthesis of nanocrystalline binary and ternary metal oxides

ABSTRACTInterplay of chemistry and nanotechnology has effectively substantiated the ever-expanding horizons of materials chemistry, leading to a paradigm shift in (nano)materials synthesis. Current challenges of chemically processed materials include efforts to redesign synthetic procedures by using less hazardous starting materials, choosing milder reaction conditions, shortening time scale of chemical transformations and most importantly reduction of energy requirements. In this context, successful substitution of classical energy input by microwave radiation is a promising alternative in most fields of common chemical synthesis. This review highlights the latest developments in the synthesis of advanced inorganic materials by microwave-assisted chemical reactions. When compared to conventional convective and conductive heating techniques, microwave irradiation provides efficient internal volumetric heating through generation of localised high temperature zones in the reaction media by direct coupling of microwave energy to the molecules present in the reaction mixture, thereby enabling rapid synthesis with superior yield and both reduced reaction time as well as processing steps.Abbreviations: [BMIM]BF4: 1-butyl-3-methylimidazolium tetrafluoroborate; [C2mim][NTf2]: 1-ethyl-3-methylimidazolium bis(trifluoromethylsulfonyl)imide; [C4mim][NTf2]: 1-butyl-3-methylimidazolium bis(trifluoromethylsulfonyl)imide; [C12Py][ClO4]: N-dodecylpyridinium perchlorate; [OMIM]TA: 1-octyl-3-methylimidazolium trifluoroacetate; AAO: anodic aluminium oxide; acac: acetylacetone; CNCs: colloidal nanocrystal clusters; CTAB: cetrimonium bromide; DEG: diethylene glycol; EDA: ethylenediamine; EG: ethylene glycol; EGMM: 2-methoxyethanol; FESEM: field emission scanning electron microscopy; FTO: fluorine-doped tin oxide; h: hours; HMT: hexamethylenetetramine; HR-TEM: high-resolution transmission electron microscopy; HPC: hydroxypropyl cellulose; IL: ionic liquids; ITO: indium tin oxide; MEA: ethanolamine; min: minutes; MPA: 3-mercaptopropionic acid; MW: microwave; nm: nanometre; NMP: n-methyl-2-pyrrolidon; OP: p-octyl polyethylene glycol phenylether; P(VP-NVP-St): polyvinylpyrrolidone-polyvinylpyrrolidone-polystyrene; P-103: polyethyleneoxide–polypropyleneoxide–polyethyleneoxide copolymer; PAA: polyacrylic acid; PC: polycarbonate; PEG: polyethylene glycol; PEG-PPO-PEG: poly(ethylene glycol-poly(p-phenyleneoxide)-poly(ethylene glycol); PET: polyethylene terephthalate; Pluronic P123: triblock copolymer; poly(ethyleneglycol)-block-poly(propyleneglycol)-block-poly(ethylene glycol); Pluronic F127: poloxamer; PPO: poly(p-phenyleneoxide); PS(540)-b-PEO(220): polystyrene-block-poly(ethyleneoxide) diblock copolymer with 540 monomerunits of styrene and 220 monomer units of ethylene oxide; PVA: polyvinyl alcohol; PVP: polyvinylpyrrolidone; QDs: quantum dots; R: ratio; s: seconds; SBA-15: Santa Barbara Amorphous-15 (mesostructured silica); SDBS: sodium dodecylbenzenesulfonate; SDS: sodium dodecyl sulphate; tan δ: dielectric loss factor; TBAH: tetrabutylammonium hydroxide; TEAB: tetraethylammonium bromide; TEG: triethylene glycol; TEM: transmission electron microscopy; TMAH: tetramethylammonium hydroxide; TMP: 2,2,6,6-tetramethylpiperidine; TOPO: trioctyl phosphine oxide; TTIP: titanium isopropoxide

Organic vs. organic - soil arthropods as bioindicators of ecological sustainability in greenhouse system experiment under Mediterranean conditions.

Organic greenhouse (OGH) production is characterized by different systems and agricultural practices with diverse environmental impact. Soil arthropods are widely used as bioindicators of ecological sustainability in open field studies, while there is a lack of research on organic production for protected systems. This study assessed the soil arthropod abundance and diversity over a 2-year crop rotation in three systems of OGH production in the Mediterranean. The systems under assessment differed in soil fertility management: SUBST - a simplified system of organic production, based on an input substitution approach (use of guano and organic liquid fertilizers), AGROCOM - soil fertility mainly based on compost application and agroecological services crops (ASC) cultivation (tailored use of cover crops) as part of crop rotation, and AGROMAN - animal manure and ASC cultivation as part of crop rotation. Monitoring of soil fauna was performed by using pitfall traps and seven taxa were considered: Carabidae, Staphylinidae, Araneae, Opiliones, Isopoda, Myriapoda, and Collembola. Results demonstrated high potential of ASC cultivation as a technique for beneficial soil arthropod conservation in OGH conditions. SUBST system was dominated by Collembola in all crops, while AGROMAN and AGROCOM had more balanced relative abundance of Isopoda, Staphylinidae, and Aranea. Opiliones and Myriapoda were more affected by season, while Carabidae were poorly represented in the whole monitoring period. Despite the fact that all three production systems are in accordance with the European Union regulation on organic farming, findings of this study displayed significant differences among them and confirmed the suitability of soil arthropods as bioindicators in protected systems of organic farming.

Dynamics of organic agriculture in Andalusia: Moving toward conventionalization?

ABSTRACTThis article analyzes the evolution of organic production in Andalusia (Southern Spain) over the course of the past decade. The analysis shows the important growth sustained by this sector supported above all by public funding. However, it is developing within an institutional framework that is favorable to conventional agriculture, generating certain imbalances that are pushing organic production toward conventionalization, and generating a strong dependence on public funding and the behavior of international markets. An institutional change is required, promoting a model of organic production that is far removed from the input substitution model, in order to ensure that organic production is more sustainable.

Analysis of Mediterranean organic greenhouse production economics and the impact of introducing agro-ecological practices

Organic greenhouse production can be a challenge, particularly in terms of selecting agricultural practices that can sustain crop production without creating environmental or economic burdens. This study was designed to assess the economic implications of the integration of agro-ecological practices within a two-year organic greenhouse rotation programme under Mediterranean conditions. Three organic systems were compared; one was a ‘conventionalised’ system based on input substitution (SUBST) and two systems were based on agro-ecological practices associated with cover crops and different soil fertility management regimes using animal manure (AGROMAN) and compost (AGROCOM). The two-year rotation included three crops: strawberry, tomato and green bean. The results revealed better economic performance, for some aspects, of AGROMAN and AGROCOM compared with the ‘conventionalised’ organic system (SUBST) and demonstrated the economic feasibility of introducing agro-ecological practices within a two-year organic greenhouse rotation.

Quantifying the indirect impacts of climate on agriculture: an inter-method comparison

Climate change and increases in CO2 concentration affect the productivity of land, with implications for land use, land cover, and agricultural production. Much of the literature on the effect of climate on agriculture has focused on linking projections of changes in climate to process-based or statistical crop models. However, the changes in productivity have broader economic implications that cannot be quantified in crop models alone. How important are these socio-economic feedbacks to a comprehensive assessment of the impacts of climate change on agriculture? In this paper, we attempt to measure the importance of these interaction effects through an inter-method comparison between process models, statistical models, and integrated assessment model (IAMs). We find the impacts on crop yields vary widely between these three modeling approaches. Yield impacts generated by the IAMs are 20%–40% higher than the yield impacts generated by process-based or statistical crop models, with indirect climate effects adjusting yields by between −12% and +15% (e.g. input substitution and crop switching). The remaining effects are due to technological change.

Is the Environment Compatible with Growth? Adopting an Integrated Framework for Sustainability

This review develops an integrated baseline model to assess the trade-offs between the natural environment and economic growth. Consumption growth is considered in terms of both welfare and sustainability. The framework features capital accumulation and the sectoral structure of the economy as key elements to cope with resource scarcity and pollution. Model extensions that vary the number of sectors and inputs, change functional forms, and introduce poor input substitution and population growth are presented. This framework highlights the dual role of inputs as a source of environmental problems and part of the solution; it also addresses uncertainty and momentum effects. This review concludes that the environment and economic growth can be compatible but that small deviations from the optimal paths might entail unsustainable development. Critical issues for sustainability include insufficient foresight, increasing damage intensity, and suboptimal policy making, although population growth and poor input substitution are not necessarily precarious for future development.

Constant elasticity of substitution functions for energy modeling in general equilibrium integrated assessment models: a critical review and recommendations

Applying constant elasticity of substitution (CES) functions in general equilibrium integrated assessment models (GE-IAMs) for the substitution of technical factor inputs (e.g., replacing fossil fuels) fails to match historically observed patterns in energy transition dynamics. This method of substitution is also very sensitive to the structure of CES implementation (nesting) and parameter choice. The resulting methodology-related artifacts are (i) the extension of the status quo technology shares for future energy supply relying on fossil fuels with carbon capture, biomass, and nuclear; (ii) monotonically increasing marginal abatement costs of carbon; and (iii) substitution of energy with non-physical inputs (e.g., knowledge and capital) without conclusive evidence that this is possible to the extent modeled. We demonstrate these issues using simple examples and analyze how they are relevant in the case of four major CES-based GE-IAMs. To address this, we propose alternative formulations either by opting for carefully applied perfect substitution for alternative energy options or by introducing dynamically variable elasticity of substitution as a potential intermediate solution. Nevertheless, complementing the economic analysis with physical modeling accounting for storage and resource availability at a high resolution spatially and temporally would be preferable.

Small can be beautiful for organic market gardens: an exploration of the economic viability of French microfarms using MERLIN

Microfarms are commercial soil-based market gardens cultivating organic vegetables with less than 1.5ha per farmer in rural France. Microfarms typically grow crops in both outdoor and protected (tunnel) areas. Despite their growing popularity among young farmers with no agricultural background, there are no data on expected income generated by these small-scale farms. Our objective was to determine the economic viability generated by a given agricultural area based on distinct microfarm scenarios. We used the stochastic model MERLIN to simulate 18microfarm scenarios combining three technical systems (varying with respect to the mechanization level, use of commercial inputs, cropping density, and number of cropping cycles per year), two marketing strategies (varying with respect to the length of the selling period and the range of crops grown), and three investment hypotheses (varying with respect to the level of bank loans and the percentage of workload used for self-built equipment). Viability was calculated from the number of simulations that generated a selected minimum monthly income (600, 1,000, or 1,400 Euro) for a maximum annual workload (1,800 or 2,500h).This study shows that organic microfarms can be made economically viable in some cases but that the risks of not reaching viability in microfarms are not to be neglected. For microfarms, system redesign based on low mechanization, higher cropping density, more cropping cycles per year, low-input practices, lower fixed costs, and lower initial investment (manual and bio-intensive system with tiller cultivation) was more favorable (meaning a higher modeled viability) than input substitution (classic system) at a small scale. A 9-month selling period without winter storage crop cultivation led to higher viability than a 12-month selling period with winter storage crop cultivation. Low-cost investment strategies based on self-built equipment and second-hand materials led to lower viability than high-cost investment strategies that purchased equipment because the low-cost strategies increased the workload. Further research on microfarms should integrate other types of production and activities, such as small-scale breeding and on-farm processing and examine in which extent collaborations between microfarmers and larger scale farms could contribute to reshape farming systems and impact rural communities beyond the gate of microfarms.

Changing age structure and input substitutability in the Thai agricultural sector

The rapidly aging society and agricultural abandonment by young people in Thailand have changed the age structure of Thai agricultural labor, and influenced the potential for agricultural production. Thus, it is important to study the feasibility of other inputs as a substitute for labor. This paper estimated the degree of elasticity substitution of inputs, particularly young labor, older labor, and physical capital. The elasticity of input substitution was estimated using a nested constant elasticity of substitution (CES) production function and nonlinear regression analysis. Research data were obtained from the annual secondary data of government sources from 1990 to 2013. The findings indicated that the input substitutability of young and older labor was low. However, capital and labor could substitute for each other. Moreover, capital better substituted for young labor than older labor. The results suggested that both the public and private sectors should encourage young people to engage in the agricultural sector, and support investment in farm machinery as a labor substitute.

Lifecycle economic analysis of biofuels: Accounting for economic substitution in policy assessment

This paper develops a lifecycle economic analysis (LCEA) model that integrates endogenous input substitution into the standard lifecycle analysis (LCA) of biofuel that typically assumes fixed-proportions production. We use the LCEA model to examine impacts of a pure carbon tax and a revenue-neutral tax-subsidy policy on lifecycle greenhouse gas emissions from cellulosic ethanol using forest residues as feedstock in Washington State. In a model allowing for input substitution in the cellulosic ethanol feedstock, conversion, and transportation process, we consider energy source substitution (woody biomass for coal in the cellulosic ethanol conversion plant and biodiesel for diesel in feedstock production and feedstock and ethanol transportation) as well as substitution of capital and labor for energy in all stages of the lifecycle. We find that ignoring endogenous input substitution by using standard LCA leads to substantial underestimation of the impact of carbon tax policies on carbon emissions. Both tax policies can substantially reduce carbon emissions by inducing substitution among inputs. The revenue-neutral tax-subsidy policy reduces emissions more effectively than the carbon tax policy for carbon tax rates currently in place throughout most of the world. It stimulates substitution of woody biomass for coal and biodiesel for diesel at much lower tax rates when accompanied by corresponding subsidies for reduced emissions from renewable sources.

Multi-instrument Pollution Abatement from Multiple Sources: The Case of Nitrogen Pollution in Groundwater

Managing pollution in accordance with marginal abatement costs is optimal only if based on both direct (end-of-pipe) and indirect (input substitution and limitation) controls. Using the example of nitrogen pollution in groundwater, we show that the marginal abatement cost function for any given pollution source can be directly derived from a social-welfare maximization problem, wherein both direct controls and inputs to pollution-generating production of a good or service are included. The solution to the optimization model reveals that abatement instruments for each source should be used according to least-marginal-abatement-cost-first, and the sources should in turn abate in order of least cost. The least-cost result remains optimal, even when the abatement target is exogenously determined.

How agro-ecological services crops affect soil arthropod diversity in Mediterranean organic greenhouse production

Conventionalization of organic agriculture through input substitution, aimed to fulfill certification requirements, without improvement of natural ecological cycles in agroecosystem, is a relevant concern especially for the organic greenhouse (OGH) sector. Following a holistic approach, more resilient agroecosystems may be designed by taking advantage of Agro-ecological Services Crops (ASC) cultivation during the crops sequence and by using organic matter amendments for the soil fertility management. In this framework, we investigated ecological sustainability of three OGH production systems by studying the soil arthropods taxa. Following systems were under assessment: i) SUBST - bare soil priori to cash crop + organic fertilizer; ii) AGROCOM - ASC as green manure priori to cash crop + compost; and iii) AGROMAN - ASC as dead mulch + animal manure. Monitoring of soil arthropods was performed by using pitfall traps and divided in two phases: the pre-crop period (during cultivation of ASC or bare soil in SUBST) and cash crop (kohlrabi) production. Collembola was the most abundant group during cultivation of ASC, in all tested systems and their activity density (AD) was higher in SUBST compared to other two systems. Isopoda, Araneae and Staphylinidae were significantly more abundant in AGROMAN, where manure was applied before ASC sowing. During kohlrabi cultivation Collembola group was confirmed as the most represented in all systems, with the highest values in AGROMAN. Moreover, significant differences were found among the systems for Opiliones, Myriapoda and Staphylinidae groups; with the highest abundance of all these taxa in the AGROCOM system. Results obtained indicate that an agro-ecological practices (ASC cultivation, compost and manure application) could contribute to ecological sustainability and the development of organic agriculture under protected environment.

Climate policy and economic growth

The paper analyses the growth effects of global warming and of climate policy in a unified approach. It surveys and illustrates the determinants of capital productivity and pollution-induced capital depreciation. The growth impacts of savings and abatement policy are highlighted and related to resource depletion, technology development, and impact intensity. Model extensions with poor input substitution and population growth are discussed. The paper concludes that the long-run impacts of climate policy are important for the design of climate policy and its political acceptance.

Производственные факторы и эластичность их замещения в России и ее дальневосточных регионах

Производственные факторы и эластичность их замещения в России и ее дальневосточных регионах

Firm Response to Competitive Shocks: Evidence from China's Minimum Wage Policy

The large regional variation of minimum wage changes in 2002-08 implies that Chinese manufacturing firms experienced competitive shocks as a function of firm location and their low-wage employment share. We find that minimum wage hikes accelerate the input substitution from labor to capital in low-wage firms, reduce employment growth, but also accelerate total factor productivity growth--particularly among the less productive firms under private Chinese or foreign ownership, but not among state-owned enterprises. The heterogeneous firm response to labor cost shocks can be explained by differences in governance or management practice, but is difficult to reconcile with the idea that competitive pressure is a substitute for governance quality.

Organic strawberry in Mediterranean greenhouse: Effect of different production systems on soil fertility and fruit quality

AbstractIn Europe, the lack of specific rules regulating organic vegetable production in protected conditions has led to the implementation of extremely diversified systems of production, at different level of intensification. In this study, we compared three strawberry organic production systems based on the following main criteria of soil fertility management: input substitution (SB), a simplified system of organic production that mimics conventional agricultural practices and two systems characterized by a more complex soil fertility management, based on the introduction, in the rotation of agroecological service crops (ASCs) and compost (AC), and of ASCs and cattle manure (AM). Strawberry yields, in the compared systems, were not significantly different in both years of our research, while, as a whole, the yield in 2013 (30.3 Mg ha−1) was significantly higher than in 2014 (28.9 Mg ha−1). Crop nitrogen (N) needs, during the entire cycle of production, were satisfied according to the same pattern by SB, AC and AM, while green manuring and organic amendments in AM and AC determined a higher soil organic N content, compared with SB. As far as the production quality is concerned, both AM and AC treatments yielded strawberry fruits similar to SB, but with better characteristics in terms of color and phenolic content. AM and AC did not differentiate statistically in the two year period of our research.

Potential of NIR spectroscopy for predicting internal quality and discriminating among strawberry fruits from different production systems

The suitability of near-infrared (NIR) spectroscopy was assessed for predicting the initial internal quality of strawberries, and for discriminating between different classes of fruits produced by three different fertility management systems: conventional (C), organic based on input substitution (S), and organic based on manure and cover crop amendment (M). Reflectance spectra were acquired using a Fourier Transform (FT)-NIR spectrometer for 219 ‘Festival’ strawberries (93M, 96S, and 30C). Relevant wavelength ranges were identified by Bruker’s OPUS software and elaborated in MATLAB. The partial least squares (PLS) SIMPLS algorithm was tested in prediction models for total soluble solids content (TSS), pH, titratable acidity (TA), ascorbic acid content, and phenolic content, while PLS-DA (DA=discriminant analysis) was used in the classification models. The intact strawberry spectra resulted in good predictions of TSS content (R2=0.85; RMSEP=0.58), pH (R2=0.86; RMSEP=0.09), and TA (R2=0.58; RMSEP=0.15). For the classification models, both sensitivity and specificity were >0.97 for external sample classes. In addition to being a valid approach for the selection of superior quality strawberries, the presented NIR methodology is expected to be a promising support for the traceability and authentication of organic produce.

Economic growth and energy use during different stages of development: an empirical analysis

AbstractThis paper empirically investigates the effect of energy use on economic growth throughout different stages of development. Along with direct effects, energy is allowed to influence income growth indirectly by capital accumulation through input substitution. We find that energy use affects economic growth primarily through the capital channel and that this result varies substantially with regard to the country's income level. For middle-income countries including the quintet of large emerging economies – Brazil, Russia, India, China and South Africa – an increase in energy use drives capital accumulation, which favors economic growth. On the contrary, for high-income countries, a higher energy input tends to withdraw productive resources from capital accumulation, harming economic growth. Considering these differences, policy measures aiming at restricting energy consumption should be evaluated against the background of a region's stage of economic development.

RETHINKING THE PURPOSE OF MICRO ENTERPRISES IN DEVELOPING COUNTRIES: EVIDENCE FOR MEXICO

A large body of economic literature has established that the primary purpose of any firm assuming unitary and constant elasticity of substitution of production inputs, among other necessary conditions, is profit maximization. However, the prevailing operating conditions of the micro enterprises raise concerns about the applicability of this formalization. Through an empirical study for Mexico using a four-input translog function (capital, labor, energy and supplies), and based on cross-sectional data, we find that the elasticities of substitution between production inputs are not unitary; in fact, some of them are complementary. This forces us to consider that instead of seeking to maximize profits, some types of micro enterprises are looking to optimize their installed capacity or achieve financial survival of the owner and their family, thus relaxing the foundations of economic analysis for the very small-scale and nascent micro enterprises.