Recent advances in econometric estimation of materials substitution

Interest in substituting reproducible inputs such as capital and labour for non-renewable materials is principally motivated by two factors — the short-run concern about supply disruptions on the part of producing countries and the long-run concern about the exhaustion of depletable natural resources. In this paper, techniques for estimating elasticities of substitution between inputs (ie between different materials or between material aggregates and other input aggregates) from production and cost functions are discussed, and the recent literature that makes use of these techniques is reviewed.