Interfuel substitution in the primary metals industries

This paper applies a translog price possibility frontier to a pooled sample in order to measure the extent of interfuel substitution effects in the primary metals industries. The results clearly indicate that relative changes in fuel prices across primary metals industries have significant effects on energy consumption. This, in turn, has important implications for public policy. In particular, the market system appears better able to deal with exogenous shifts in energy supplies than has frequently been assumed in the formulation of public policies toward the energy crisis.