The Estimation of Factoral Eff ect ofEnergy in Different Economic Sectors

In this paper we showed th at e nergy as an input has a significa nt role in th e production fun ction in the diffe rent sectors o f eco nomy. Ene rgy inte nsity in th e Ir ani an economy has increased dramatically d ur ing 1972-94. Usi ng a Cobb-Douglas production fu nctio n for the diltcrc nt sectors in Ir an (assuming each se ctor to usc lab o r. ca pit al and e ne rgy asinput ) we showed th at th e input elasticity for Tr ansport ation . Indu str ialand Ag ricultural sectors are 1. 3, 0. 7 and 0.46 respectively. The inpute lastici ty for th e economy as a whole is about 0.3 . We also calculated the price e las ticity for each sector. The results were : -0.27. - 0.4. - 0.5 for Transportatio n, Industrial and Agricultural sectors resp ectively and it is- 0.5 for th e economy as a whole. Our res ults or price el asticity indicat es that for The purpose of decreasing energy consumption, price policy is not necessar ily an appro priate nolicv if the re lat ive nriccs increase