Energy Substitution Effect in Transportation Sector of Iran Based on The Translog Production Function

Energy is the driving force behind all human activities. The scope of these activities is from day to day activities to macroeconomic activities in each country. Today, the world is moving towards lowering energy consumption and increasing the efficiency of using existing energy, and the issue of energy substitution in different contexts in scientific communities is under consideration. Energy is a major factor in the development of every country that needs more effort to achieve sustainable development. The transportation sector plays a key role in achieving development. Therefore, it is important to study the effective factors in this sector as the second largest energy consumer in Iran and in the world. In this study, a transport function model for the transportation industry in Iran is established and the factors of production include capital, energy and labor. The production stretch and substitution of each of the factors of production have been calculated and analyzed, respectively. The results show that during the period of 1362 to 1391, there is a relatively good substitution between energy and capital in the transportation sector in Iran. This means that, through greater allocation of capital in the transportation industry, energy-saving technology can be continuously upgraded and a succession of capital and energy can be realized. Also, the effect of substitution of capital and energy on the reduction of pollutants from fuel consumption in the transportation sector was investigated.