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RESEARCH PRODUCT

Interfuel substitutions in the Great Britain's industry in the 1987-1993 period : a translog approach

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According to the Department of Trade and Industry (1994), the British consumption of fuel for manufacturing industry, over the period 1973-1993, may be characterized by, firstly, a substitution of oil by gas, and secondly, an increase of energy efficiency. This study attempts to tackle both phenomena by using an econometric approach, based upon translog interfuel substitution models. To do so, the « classic » translog model ought to be enhanced in order to capture the prospect of (1) a non-homothetic feature of the manufacturing production process, (2) energy efficiency -via the implementation of an embodied technical change specification, and (3) short run and long run fuel consumption evolution. The estimation, computed with data from 1987(Q1) to 1993(Q4), exhibits unexpected results, namely, a clear decrease of energy efficiency and the substitution of gas by oil.