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Economics of Fuel Substitution with Special Reference to India
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Measuring fuel substitution in the industrial sector would aid the policy makers and industry to explore alternative dimensions for their expansion through cost minimization. A popular approach for the estimation of substitution relationships is translog cost approach this has been capturing the attention of researchers in recent times. While there are a number of studies on the applications of the translog energy model in developed countries little is known about the nature of fuel substitution in developing countries including India. The present study aims to estimate the cost shares and own-cross price elasticities of fuels in India by taking aggregate level data for power, fertilizer and textile industries and with disaggregated data at company level for the fuels, coal, oil and natural gas.
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