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Energy and Non-Energy Inputs Substitution Possibilities in Nigeria's Manufacturing Sector: A Translog Cost Function Approach

This study investigates the substitution possibilities between energy and non-energy inputs in Nigeria's manufacturing sector from 1981 to 2023. Utilizing a transcendental logarithmic (translog) cost function estimated via iterated Seemingly Unrelated Regression (iSUR), we compute both Allen and Morishima elasticities of substitution to analyze factor relationships. Results reveal significant substitution possibilities: capital and energy are substitutes with a Morishima elasticity (MES) averaging 3.66, while energy and labor show substitutability with an MES of 2.32. Conversely, capital and l…

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