PRODUCTION FUNCTION CHANGE

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    Candi Clouse

    Hi there!

    It sounds like you want to do an Analysis-by-Parts. So start with the total cost of the construction, less the cost of pipe, in an Industry Spending Pattern in Industry 60. Then, in the advanced menu, zero out Industry 188 and normalize the spending pattern. Then add a separate Commodity Event for the pipe and set the LPP to 70%.

    Modeling the Industry Spending Pattern, you won't get the effects of the labor, so you will need to add that in with an additional Labor Income Event. Then, you will have to add back in your Direct Effects. Check out the article ABP: Using an Industry Spending Pattern for more details.

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    Tharris

    Thanks for your help. My additional question to bounce off you is that say the pipe will be put in one county of the state but about 70% of the pipe is purchased from a pipe manufacturer in another county of the state. To show multi regional impacts, one could zero out the  the pipe purchase in sector 60 where the pipe is being replaced and go to the other county an put the purchase in as an industry input to show cross regional impacts? Is this correct?

     

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    Candi Clouse

    That is absolutely correct! You could even link the two Regions using MRIO!

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    Tharris

    I just wanted to check with you. The plastic pipe for the natural gas replacement will be produced in one county and delivered to another county in the state.So for the county that will produce the pipe I have used it as an industry change not commodity change. Am I correct?

     

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    Candi Clouse

    If you know the item that is being purchased, you can use the Commodity Output Event Type. The article Industry vs Commodity Output is a great resource when forced with this decision.

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