Does directed technological change favor energy? Firm-level evidence from Portugal

Abstract Economic performance is closely related with energy consumption, the major part of which still comes from non-renewable sources. While endeavoring to promote renewable energy, policy makers are interested in technological change that also increases efficiency. However, both growth models directed and microeconomic theories regarding innovation suggest not necessarily biased towards energy. In order investigate at micro level, this paper applies stochastic frontier analysis firm data for 32 economic subsectors, respect output produced four inputs: capital, labor, electricity fuel. Subsectors demonstrate different levels technical inefficiency, could be induced by capital deepening higher share financial income total revenue. Output elasticity labor generally high among emphasizing as main driver growth. low overall, although a few subsectors enjoy better marginal returns. most labor; between fuel, has favored fuel more cases. We infer market size effect likely overwhelm others deciding direction change. Thus, should include tools addition price induce