Substitutability of Energy and Capital

There is a large empirical literature on the issue of whether capital and energy are substitutes or complements and on how substitutable they are (e.g. Berndt and Wood, 1979; Apostolakis, 1990; Thompson and Taylor, 1995; Frondel and Schmidt, 2002; Thompson, 1997; Stern, 2007; Koetse et al., 2008). Substitutability can be measured using the Hicks or direct elasticity of substitution, which