Technological Innovation and a Changing Energy Mix - A Parametric and Flexible Approach to Modeling Ontario Manufacturing

For the purposes of explaining historical trends in relative fuel usage and energy efficiency, an encompassing framework must incorporate both the influence of changing fuel prices and technological change. Schurr (1982), Rosenberg (1983), Jorgenson (1984, 1986) and Berndt (1986) have provided recent documentation of the importance of these two factors in explaining productivity growth. Moreover, these studies indicate that a key to understanding such trends is analysis at the individual industrial sector level. In ignoring the influence of technological change on interfuel substitution, modern studies (e.g., Gopalakrishnan, 1987; Moghimzadeh and Kymm, 1986) have left unaltered the approach taken in the pioneering studies of Berndt and Wood (1975), Fuss (1977), Griffin and Gregory (1976) and Halvorsen (1977).