Translog Production Function Research Articles

Energy substitution effect on transport sector of Pakistan: A trans-log production function approach

Abstract Transport sector of Pakistan is one of the highest fossil fuel consumption and carbon dioxide (CO2) emission sector. As a key user of fossil fuel energy, Pakistan’s transport sector has created many problems i.e. noise, air pollution, CO2 emissions and environmental problem. In this study, trans-log production function model for Pakistan’s transport sector is established and input factors of labor, capital, and energy consumption are comprised. The output elasticity of an individual, input elasticity between a pair of factors, and elasticity of substitution between input factors are analyzed. To manage the multicollinearity issue, ridge regression is applied at different values of K. From 1991 to 2018, the outcomes show that output elasticities and a pair of input factor’s elasticities are increasing. The elasticities of substitutions between labor-energy consumption and capital-energy consumption show higher outcomes because of the more elevated amount of substitution elasticities. The substitution elasticity between labor and capital starts from 0.9797 to 0.9326 with slightly decreasing trend. The outcomes suggest that maximum output can be achieved by increasing capital and energy technologies. By allocating the maximum capital in the transport industry, energy-saving technologies, substitution between energy and capital, and substitution among capital-labor can enhance environmental protection. In the above’s view function, the present study estimates the level of energy-saving and CO2 emissions reduction under the different scenarios from 2015 to 2018. The policy suggestions of the results are given below.

Carbon Sequestration Total Factor Productivity Growth and Decomposition: A Case of the Yangtze River Economic Belt of China

To find out whether carbon sequestration is both effective at mitigating climate change and promoting economic growth, in this paper, by adopting a stochastic frontier panel model with translog production function, carbon sequestration is incorporated into endogenous variables to establish estimation model of carbon sequestration total factor productivity (CSTFP) and examine CSTFP growth and its drivers decomposition of the Yangtze River Economic Belt (YREB) of China in three estimations. The result shows that, (1) compared to traditional TFP growth, CSTFP growth in YREB is improved by 26.74 percentages (from −26.55% to 0.20%), contributed by three positive drivers of technical efficiency change (28.59%), technological progress change (18.55%), and scale efficiency change (3.99%); (2) different CSTFP growth exists in three watershed segments of YREB, which firstly is the upper reaches (0.62%), then the lower reaches (0.11%) and the middle reaches (−0.14%). Improved CSTFP growth owes to carbon sequestration’s harmonious symbiosis where natural ecosystems and human activities are naturally blended while insufficient synergies are bottleneck for promotion of CSTFP growth in YREB. Related policy suggestions are provided in the end. The proposed analysis framework is efficient to disclose CSTFP growth in YREB, and can also be applied to similar analysis on CSTFP in regions and extended to multi-country/region analysis.

How Productive Services Affect Apple Production Technical Efficiency: Promote or Inhibit?

Agricultural productive services provide a new entry point to solve the “labor dilemma” and contributes to the sustainable development of the apple industry. In this study, we establish a random frontier model with the Translog production function to analyze the influence of productive services on the technical efficiency of apple production based on a microscopic survey data of 661 apple farmers. The results indicate that the purchasing proportions of productive services are obviously different among the different links of apple production, while those among different regions are not obvious. Overall, productive services have a positive effect on improving the technical efficiency of apple production, but productive services in different links have a different effect; specifically, productive services in the bagging link have a positive effect on the technical efficiency of apple production, productive services in the pest controlling link have a negative effect, and productive services in other links have no significant effect. We suggest that policymakers should promote the orderly development of agricultural productive services, focus on improving the popularity of productive services in bagging links, and improve the quality of productive services in the pest control link.

The marginal benefits of healthcare spending in the Netherlands: Estimating cost-effectiveness thresholds using a translog production function.

New technologies may displace existing, higher‐value care under a fixed budget. Countries aim to curtail adoption of low‐value technologies, for example, by installing cost‐effectiveness thresholds. Our objective is to estimate the opportunity cost of hospital care to identify a threshold value for the Netherlands. To this aim, we combine claims data, mortality data and quality of life questionnaires from 2012 to 2014 for 11,000 patient groups to obtain quality‐adjusted life‐year (QALY) outcomes and spending. Using a fixed effects translog model, we estimate that a 1% increase in hospital spending on average increases QALY outcomes by 0.2%. This implies a threshold of €73,600 per QALY, with 95% confidence intervals ranging from €53,000 to €94,000 per QALY. The results stipulate that new technologies with incremental cost effectiveness ratios exceeding the Dutch upper reference value of €80,000 may indeed displace more valuable care.

Technical Efficiency of Red Pepper Production and Its Determinants Among Smallholder Farmers in Shashogo District of Hadiya Zone, SNNP Region, Ethiopia

This study briefly estimates the technical efficiency level of red pepper production and identifies its determinants that influence the technical efficiency. To analyze data, both descriptive statistics and econometric models were used. Stochastic Frontier function that incorporated inefficiency factors was to provide estimates of technical efficiency and its determinants using data obtained from 119 randomly selected sample red pepper producers from three kebeles of the study district. The Trans log production function was found to adequately fit the data. The maximum likelihood parameter estimates showed that almost all input variables have positive and significant effects on production except land size which is allocated for red pepper production. The analysis showed that the mean technical efficiency of farmers was 73.66%, implying that output in the study area can be increased by 26.34% at the existing level of inputs and current technology by improving determinants of technical efficiency. Technical inefficiency effects are modeled as a function of farmer specific socio-economic factors. The result showed that among the variables that are supposed to determine technical inefficiency, education level of farmers, age, distance from residence to plot, experience, credit access, extension visit, slope of land and proximity to market are significantly influencing technical inefficiency of red pepper producers. Moreover, education, distance, extension visit, proximity to market and credit access tends to increase technical efficiency of farmers whereas age of household, poor quality of soil and slope of land decrease their technical efficiency. Therefore, the road, net work in the rural areas; development of telecommunication facilities, rural market centers (institutions) should have to be advocated and promoted by farmers and government to overturn output loss by technical inefficiency of red pepper producers in Shashogo District. Keywords : Technical efficiency, stochastic frontier, determinants, red pepper, Shashogo District DOI : 10.7176/JRDM/58-04 Publication date : August 31 st 2019

Potential Inter-Fuel Substitution between Hydroelectricity and Fossil Fuels in Nepal

In spite of huge hydro-electricity potential, Nepal still relies on fossil fuel to meet its energy demand. However, as the pace of hydroelectricity generation gets momentum in recent years, there are concerns about the excess supply of hydroelectricity in the domestic market in the near future. In this context, this paper examines the potential substitution of conventional fuels by the hydroelectricity in Nepal. Using translog production function, this paper calculates the elasticity of substitution between hydroelectricity, coal, gas, petrol, diesel, and kerosene for the period of 1980 to 2016. Our findings suggest that all the fuels except kerosene are positively associated with economic growth during the study period, and the output elasticity of hydroelectricity is found be largest among these sources of energy. The findings also suggest that hydroelectricity has the potential for substitute other conventional fuels if the share of hydroelectricity is increased in the energy consumption composition. While there is not a huge variation in the elasticity of substitution between hydroelectricity and other fuels, the hydroelectricity has relatively higher potential to substitute coal followed by petrol, diesel, kerosene, and gas. The findings of the paper are supportive of the hypothesis that Nepal could potentially absorb the hydroelectricity generated in near future if incentive mechanisms are initiated that allow substitution of conventional fossil fuels by the hydroelectricity.

Renewable energy (electricity) development in Ghana: Observations, concerns, substitution possibilities, and implications for the economy.

Can Ghana build its economy on renewable energy? Is it possible to substitute nonrenewable for renewable energy? What is the impact of renewable energy on the economy of Ghana? These questions are relevant and worth considering as far as the renewable energy development agenda in Ghana is concern. Using the translog production function approach, this study primarily investigates whether Ghana can move away from nonrenewable electricity generation to renewable power generation. In particular, we provide estimates for the relationship between the two energy types and output. The estimates are then used to calculate the output and substitution elasticities between renewable and nonrenewable energy. Our findings show that while the impact of nonrenewable energy on Ghana's economy is negative, that of renewable energy is insignificant, with output elasticities for both energy types averaging −0.139 and 1.875 respectively. Even though substitution elasticity suggests the possibility of moving towards a renewable power generation system, this study also highlights the limitations associated with such transition, citing inherent problems such as scale, cost, and location. Based on the analysis done in the context of the findings, this study recommends a policy that supports an optimal energy matrix with both renewable and nonrenewable sources.

The impact of climate change on the sustainable development of regional economy

Global warming has aroused the attention all over the world, because not only can it directly damage the living environment, but it can also impact on the social and economic development, of a region in an obvious and far-reaching way. In this paper, we builded a trans-log production function model incorporating variables, such as rainfall, labor force, technology and temperature to simulate how climate changes impacted on the regional economics. Time series data of the domestic economy of Nanjing, a city in the southeast China, between 1996 and 2017, were used to verify the production theory of trans-log production frontier. The results showed that: with the rainfall increased and the temperature declined, the climate impact on the economy and the absolute value of the output elasticity of the frontier diminished. In addtion, the climate change was also positively related to the capital investment. The larger variation of temperature negatively impacted on the economic development.

How to optimize the allocation of research resources? An empirical study based on output and substitution elasticities of universities in Chinese provincial level

Although significant progress has been made in China's basic research in recent years, there remains a wide gap between research in China and that from developed countries. How to optimize the allocative efficiency of research resources is of great importance for increasing research output. In this paper, using the fixed effect stochastic frontier model based on the translog production function, we estimate output and substitution elasticities of research and development (R&D) inputs at universities in China's provincial level during 2009–2016. We find that the R&D technical efficiency of China's universities, after a rapid growth, has tended to become relatively stable. Improvements of internationalization degree and exogenous R&D capabilities are conducive to promoting R&D technical efficiency, whereas expenditures from government grants inhibit the promotion of R&D technical efficiency; the effects of R&D capital deepening and internet penetration are not evident. The output elasticity of R&D capital is much higher than that of R&D personnel, suggesting that R&D capital is the main driving force of research output. The substitution elasticity between R&D capital and personnel has experienced a change from substitution to complementary since 2014. To realize sustained growth of research output, we should increase R&D input with positive output elasticity or reduce R&D input with negative output elasticity, making the necessary trade-offs according to the substitution relationship between the two R&D inputs.

Aktivitas Ekspor dan Inefisiensi Teknis Industri Andalan Ekspor Indonesia

This study examines the effect of export activity on the technical inefficiency by using firm level panel data taken from Annual Survey of Manufacturing conducted by BPS for the period 2010 to 2014 and focus on Indonesia’s mainstay export industry which classiffied into low technology and high technology sector. A stochastic frontier model with one stage approach is applied to the translog production function to estimate firm level technical efficiency. The findings support the theoretical implications of the positive impact of export activities on firm’s efficiency and low technology sectors have higher efficiency rate than high technology sectors.

Internet penetration, human capital and economic growth in the ASEAN economies: evidence from a translog production function

ABSTRACTThis study examines the effects of human capital formation and Internet penetration on economic growth. The Internet encourages economic growth by providing innovative applications and opportunities through a new medium of information exchange. The growth potential that the Internet provides, however, is dependent on the human capital formation of an economy to fully absorb the potential capabilities of the Internet. This study employs a panel dataset of 10 Association of South-East Asian Nations (ASEAN) economies from the period of 1999–2014 and examines the relationship using a translog production function model. The estimated results report that human capital formation and Internet penetration is positive and significant towards economic growth. Furthermore, human capital formation and the Internet interacts positively and is significant to economic growth, providing support for the absorptive ability of human capital. The ASEAN economies should continue to adopt policies that encourage human capital formation and support the development of the communication technology sector to promote affordability and accessibility of the Internet across the region.

The actual heating energy conservation in China: Evidence and policy implications

Heating energy conservation is an important part of China's energy conservation strategy. China's coal-fired heating is reducing and heating energy conservation policy is enhancing but not in a significant manner. This paper aims to figure out the actual realization of Chinese governments’ ex ante expectations towards energy conservation policy in the heating industry. A trans-log production function is established incorporating asymmetric energy price decomposition and seemingly unrelated regression method is adopted to estimate the own-price and cross-price elasticity of factor input demands of the heating industry, then the direct energy rebound effect is estimated within China's heating industry. The results indicate that the actual energy-saving effect of the heating industry in China only realizes 60.04% of the theoretical energy-saving goal. Energy rebound in the heating industry in China is not only influenced by technical progress but also influenced by its state-owned monopoly status.

Decomposition of Output and Productivity Growth in the 2-Digit Manufacturing Industries in India:An Interstate Analysis

The study examines and applies the theoretical foundation of the decomposition of output total factor productivity growth (TFPG) of the 2-digit manufacturing industries in India and in its fifteen major industrialized states from 1981-1982 to 2010-2011, during the pre- and post-reform period (1981-1982 to 1990- 1991and 1991-1992 to 2010-2011). Output growth is decomposed into input growth effect and TFPG where the three attributes of TFPG are adjusted scale effect technological progress and technical efficiency change. A stochastic frontier model with a translog production function is used to estimate the growth attributes of TFP of the 2-digit manufacturing industries in 15 major industrialized states vis-a-vis all-India. Empirical results show that input growth effect is the major contributor to output growth, whereas TFPG sometimes remains inadequate even though it has a significant effect on output growth. Technological progress is found to be the major contributor to TFPG and the decline in it of the 2-digit manufacturing industries in almost all the states as well as in all-India during the post-reform period is due to decline in technological progress of the same. The scale effect has also become important in recent years, but the impact of technical efficiency effect becomes negative in most cases. The relevant policy implication for a sustainable post-reform Indian economy is the need to improve TFPG components of the manufacturing industries for the overall balanced growth of the economy.

Industry level production functions and energy use in 12 EU countries

In the EU context, industrial sectors have significantly reduced their energy consumption in the last decade. Despite significant disparities existing across industry branches, comparative studies focused on the effect of energy use in the production growth of the different industry branches are limited and not related to the EU countries. This study undertakes a production growth approach to analyze the effect of energy use in different industry branches, through the estimation of translog production functions, based on data from 12 EU countries during the 2000–2014 period. In addition, two sub-periods are studied to evaluate if industrial energy efficiency has been improving through time, specifically from 2007. Findings confirm the existence of different behavior patterns with respect to energy use in the considered sectors and from one sub-period to another. As a result, policy measures should be sector-specific, since no general production-energy use patterns can be obtained.

On Nigeria's renewable energy program: Examining the effectiveness, substitution potential, and the impact on national output

Considering the objectives of Nigeria's Renewable Energy Program, three basic questions are asked in this study: Can Nigeria really build its economy on renewable energy? Is it possible to substitute nonrenewable energy for renewable energy? What is the impact of renewable energy on the economy? This study primarily analyzes renewable energy development in Nigeria. Among other things, we estimate the economic impact, output elasticity, and the substitution possibilities of both renewable and nonrenewable energies. Our findings, based on a dataset from 1980 to 2015, in the framework of the translog production function, show that capital and labor are the main drivers of output in Nigeria; however, the economic impact of both energy types (renewable and nonrenewable) are insignificant, even though positive. With output and substitution elasticities being positive, this study confirms the possibility of moving towards a renewable power generation, but also highlights the limitation associated with such transition, citing inherent problems such as power density and scale, cost, and location. Based on Nigeria's economic and industrialization agenda, this study agrees with the respective strategies enshrined in the Renewable Energy Program but recommends that its implementation should be gradual and in accordance with Nigeria's economic goals.

Measurement and evolution of eco-efficiency of coal industry ecosystem in China

China's energy consumption and environmental problems are becoming increasingly urgent issues, with the ongoing rapid development of the nation's economy. A further investigation of eco-efficiency of the coal industry ecosystem (CIE) would contribute toward the healthy development of coal-mining cities. This study uses the stochastic frontier analysis (SFA) based on the assumptions of the Translog production function to assess the eco-efficiency of CIE and the potential promotion of 28 typical coal-mining cities in China. The results show that although the eco-efficiency of CIE of coal-mining cities is not high, it witnessed an overall increase from 2007 to 2014. In regional terms, coal-mining cities in the east have the highest eco-efficiency, while coal-mining cities in the west have the highest potential promotion; additionally, coal-mining cities in the northeast have the lowest eco-efficiency and potential promotion. Overall, the regional differences are significant. Moreover, the ownership structure and environmental regulations have significant inhibitory effects on the improvement of eco-efficiency, while marketization level, technological innovation, and energy price have significantly positive impacts.

Empirical analysis on energy rebound effect from the perspective of technological progress—a case study of China's transport sector

Energy rebound effect is a major issue in energy economics. Global energy and environmental problems have compelled the need for simultaneous attainment of economic development and energy conservation. Technological progress increases energy efficiency and saves energy, but it also causes energy rebound effect which discounts the expected energy conservation. China's transport sector is energy-intensive. Therefore, investigating rebound effect in China's transport sector has a very important significance for energy conservation and the formulation of related policies. Taking China's transport sector as a case study, we used translog production function to measure the contribution rate of technological progress to output growth, and estimated the rebound effect. The results show that the average rebound effect was about 68.3% during 1981–2015. Finally, we provided relevant policy recommendations on the rebound effect based on the characteristics of energy use in China's transport sector.

Determinants of technical efficiency in duck production in southwest Nigeria

Abstract The need to complement the supply of animal products with other sources of poultry necessitates exploring the potentials of domestic duck production. Studies conducted on indigenous ducks in Nigeria have paid less attention to the resource requirements and its determinants to duck production. This study therefore estimated technical efficiencies of domestic duck producers in South-western Nigeria, and identified some socio-economic factors, which influence them. A combination of purposive and random sampling was employed. Stochastic frontier production function approach using a translog production function was used to estimate the technical efficiencies of indigenous duck producers, while inefficiency model was used to determine the socio-economic factors affecting the technical efficiencies. The results showed that the level of technical efficiency ranged from 48% to 96% with a mean of 83.3%, which suggests that average duck output was 16.7% short of the maximum possible level. This implies that productive efficiency could still be improved using the subsisting resource base. The study concluded that mounting capacity building programmes for duck farmers generally, and availability of credit could increase the productivity of duck enterprise if monitored.

Determinants of technical efficiency in duck production in southwest Nigeria

Abstract The need to complement the supply of animal products with other sources of poultry necessitates exploring the potentials of domestic duck production. Studies conducted on indigenous ducks in Nigeria have paid less attention to the resource requirements and its determinants to duck production. This study therefore estimated technical efficiencies of domestic duck producers in South-western Nigeria, and identified some socio-economic factors, which influence them. A combination of purposive and random sampling was employed. Stochastic frontier production function approach using a translog production function was used to estimate the technical efficiencies of indigenous duck producers, while inefficiency model was used to determine the socio-economic factors affecting the technical efficiencies. The results showed that the level of technical efficiency ranged from 48% to 96% with a mean of 83.3%, which suggests that average duck output was 16.7% short of the maximum possible level. This implies that productive efficiency could still be improved using the subsisting resource base. The study concluded that mounting capacity building programmes for duck farmers generally, and availability of credit could increase the productivity of duck enterprise if monitored.

Output elasticities and inter-factor substitution: Empirical evidence from the transportation sector of Shanghai

As a major consumer of fossil fuels, the transportation sector in Shanghai presents a wide range of problems, including air pollution, noise, and traffic congestion. This study aims to explore the energy substitution effect based on a trans-log production function to evaluate the contribution of each input factor to sectoral output, and reveal the substitution possibilities between capital, labor, and energy. To deal with a multicollinearity problem, we adopt ridge regression to obtain the coefficient of each variable under the appropriate penalty value. The bootstrap method is used for making statistical inferences, and the 95% confidence interval is obtained with 1000 bootstrap samples. The empirical results demonstrate the following. (1) The output elasticities of capital (0.13–0.15), labor (0.24–0.25), and energy (0.43–0.48) are positive and show an increasing trend over the study period. (2) The substitution elasticity between labor and energy is the highest among the input factors (around 1.0095), with a slight decreasing trend. (3) The substitution elasticity between energy and capital ranges from 1.0018 to 1.0021, and the substitution elasticity between capital and labor is infinitely close to 1.