Prague Economic Papers 2021, 30(2):189-215 | DOI: 10.18267/j.pep.764

Elasticity of Substitution, Price Effect and Sustainable Fertilizer Use: A Translog and SUR Analysis in China

Yipu Pang ORCID...ab, Jingqi Dang ORCID...ac, Wei Xud
a China Academy for Rural Development, Zhejiang University, Hangzhou, Zhejiang, China
b School of Public Affair, Zhejiang University, Hangzhou, Zhejiang, China
c School of Management, Zhejiang University, Hangzhou, Zhejiang, China
d School of Public Administration, Fujian Agricultural and Forestry University, Fujian, China

Fertilizer has brought great pressure to sustainable ecological environment. Research on the effect of price on fertilizer use as well as the substitution relationship of fertilizer and other input factors of agricultural production is of great importance for green, efficient, and intensive agricultural production in the world. This study first constructs translog cost functions and models of elasticity, then uses the factor input and price data from 2004 to 2016 to measure the price elasticity of fertilizer demand, and the elasticity of factor substitution in China's maize and cabbage production. The results suggest that: the price elasticity of fertilizer demand is in a low elasticity range; there is a compensation relationship between fertilizer and labour and a substitution relationship between fertilizer and machinery in China's maize production, while these relationships in China's cabbage production are opposite.

Keywords: Elasticity of substitution, price effect, sustainable fertilizer use, translog, SUR
JEL classification: C51, D24, Q10, Q58

Received: March 18, 2020; Revised: July 15, 2020; Accepted: September 21, 2020; Prepublished online: December 9, 2020; Published: April 14, 2021  Show citation

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Pang, Y., Dang, J., & Xu, W. (2021). Elasticity of Substitution, Price Effect and Sustainable Fertilizer Use: A Translog and SUR Analysis in China. Prague Economic Papers, 30(2), 189-215. doi: 10.18267/j.pep.764
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