ESTIMATING THE EFFECTS OF A RELATIVE INCREASE IN ENERGY PRICES ON PRODUCTION AND LOCATION IN THE U.S. CEMENT INDUSTRY.

摘要

The conditions defining variations in factor intensities are well developed in industrial location theory. In practice, however, the underlying production function is typically assumed to be of the fixed coefficient type. This assumption can cause significant distortion of the results when relative input prices vary in space and time, or when factor proportions vary with the level of output. The large relative increase in energy prices during the 1970's suggests the presence of the former effect, and the existence of scale economies may permit the latter. A model capable of recovering these effects was developed and tested on U.S. cement production data. Results indicate that both effects noted above were present, suggesting the need for more flexible approaches to the industrial location problem in practice.