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INPUT SUBSTITUTION AND DEMAND IN THE WATER SUPPLY PRODUCTION PROCESS
Citation:
Kim, H. AND R. Clark. INPUT SUBSTITUTION AND DEMAND IN THE WATER SUPPLY PRODUCTION PROCESS. U.S. Environmental Protection Agency, Washington, D.C., EPA/600/J-87/022.
Description:
The structure of input demand for U.S. water utilities is analyzed by estimating a translog cost function. An important feature of the model includes the multiproduct specification of the water supply production process. Operating variables are also specified to include capacity utilization and service distance, which are considered important for delivery of water supply. Results show that capital is a substitute for both energy and labor, but that no strong substitution possibilities exist between energy and labor. Energy is an input which requires intensive use in water production. Small utilities are found to enjoy economies of scale. Capacity utilization and service distance are found to have significant effects on input demand. (Copyright (c) 1987 by the American Geophysical Union.)