Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Factor demand flexibility in the primary aluminium industry: Evidence from stagnating and expanding regions
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.ORCID iD: 0000-0003-2264-7043
2011 (English)In: Resources policy, ISSN 0301-4207, E-ISSN 1873-7641, Vol. 36, no 3, p. 238-248Article in journal (Refereed) Published
Abstract [en]

The purpose of the paper is to analyse and compare short-run factor demand responses to price changes in the primary aluminium industry in Western Europe and the Africa-Middle East (AME) region. We outline a Translog variable cost function model, which is estimated employing a panel data set at the individual smelter level over the time period 1990-2003. The empirical results show evidence of limited - but far from insignificant - price-induced factor demand responses in the short-run. Overall aluminium smelters in the AME-region show evidence of higher estimated short-run own- and cross-price elasticities than their competitors in Western Europe, at least when it comes to labour and electricity demand. One important reason for this result is the greater number of pot lines with slightly different technologies at each smelter as well as the more intense use of the Prebake technology in the AME-region making retrofits in existing plants less costly than in Western Europe. The results also suggest that in both regions the demand for electricity has over time become less sensitive to short-run price changes, while the labour and material demand responses to price changes have increased but only in the AME-region. The liberalisation of the Western European electricity markets in combination with the rigid labour markets in this part of the world suggest that the shift in production capacity from the western world to the AME-region as well as China may continue

Abstract [en]

The purpose of the paper is to analyse and compare short-run factor demand responses to price changes in the primary aluminium industry in Western Europe and the Africa–Middle East (AME) region. We outline a Translog variable cost function model, which is estimated employing a panel data set at the individual smelter level over the time period 1990–2003. The empirical results show evidence of limited – but far from insignificant – price-induced factor demand responses in the short-run. Overall aluminium smelters in the AME-region show evidence of higher estimated short-run own- and cross-price elasticities than their competitors in Western Europe, at least when it comes to labour and electricity demand. One important reason for this result is the greater number of pot lines with slightly different technologies at each smelter as well as the more intense use of the Prebake technology in the AME-region making retrofits in existing plants less costly than in Western Europe. The results also suggest that in both regions the demand for electricity has over time become less sensitive to short-run price changes, while the labour and material demand responses to price changes have increased but only in the AME-region. The liberalisation of the Western European electricity markets in combination with the rigid labour markets in this part of the world suggest that the shift in production capacity from the western world to the AME-region as well as China may continue. Highlights - We analyse short-run factor demand responses to price changes in the primary aluminium industry. - The study compares price responses in Western Europe and the Africa–Middle East (AME) region. - The analysis relies on a panel data set at the smelter level over the time period 1990–2003. - Aluminium smelters in the AME-region respond more strongly to higher input prices. - This is particularly evident in the cases of labour and electricity demand.

Place, publisher, year, edition, pages
2011. Vol. 36, no 3, p. 238-248
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:ltu:diva-4421DOI: 10.1016/j.resourpol.2011.03.002Local ID: 25e02508-2ee4-47ee-933f-401ca5f3e4f5OAI: oai:DiVA.org:ltu-4421DiVA: diva2:977294
Note
Validerad; 2011; 20110401 (ysko)Available from: 2016-09-29 Created: 2016-09-29 Last updated: 2017-11-24Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full text

Search in DiVA

By author/editor
Blomberg, JerrySöderholm, Patrik
By organisation
Social Sciences
In the same journal
Resources policy
Economics

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 200 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf