The Effects of Energy Price Changes on Commodity Prices, Interprovincial Trade, and Employment

By J.R. Melvin

© 1976

This study investigates how an increase in the price of petroleum and natural gas would alter commodity prices in Ontario, and then estimates the effects on production and employment. A 100 per cent increase in energy prices is assumed. Using the Ontario input-output table it is found that commodity price increases would be relatively small, on average 2.7 per cent over-all and less than 1.6 per cent in basic manufacturing. However, using Cobb-Douglas utility functions it is also calculated that the Ontario labour force would suffer an employment reduction of 2 to 4 per cent.
 Economic policy alternatives open to Ontario are then considered. Subsidies to offset commodity price increases would be very expensive and difficult to administer. Retaliatory measures, such as a change in the Ontario Corporate Income Tax, would be inefficient. It is concluded that from Ontario’s point of view, the best economic policy would be to attempt to ensure that petroleum and natural gas prices remain uniform throughout Canada.

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Product Details

  • Series: Heritage
  • World Rights
  • Page Count: 112 pages
  • Dimensions: 6.0in x 0.0in x 9.0in
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SKU# SP005590

  • PUBLISHED DEC 1976

    From: $14.21

    Regular Price: $18.95

    ISBN 9780802033376
  • PUBLISHED DEC 1976

    From: $14.21

    Regular Price: $18.95

Quick Overview

This study investigates how an increase in the price of petroleum and natural gas would alter commodity prices in Ontario, and then estimates the effects on production and employment.

The Effects of Energy Price Changes on Commodity Prices, Interprovincial Trade, and Employment

By J.R. Melvin

© 1976

This study investigates how an increase in the price of petroleum and natural gas would alter commodity prices in Ontario, and then estimates the effects on production and employment. A 100 per cent increase in energy prices is assumed. Using the Ontario input-output table it is found that commodity price increases would be relatively small, on average 2.7 per cent over-all and less than 1.6 per cent in basic manufacturing. However, using Cobb-Douglas utility functions it is also calculated that the Ontario labour force would suffer an employment reduction of 2 to 4 per cent.
 Economic policy alternatives open to Ontario are then considered. Subsidies to offset commodity price increases would be very expensive and difficult to administer. Retaliatory measures, such as a change in the Ontario Corporate Income Tax, would be inefficient. It is concluded that from Ontario’s point of view, the best economic policy would be to attempt to ensure that petroleum and natural gas prices remain uniform throughout Canada.

Continue Reading Read Less

Product Details

  • Series: Heritage
  • World Rights
  • Page Count: 112 pages
  • Dimensions: 6.0in x 0.0in x 9.0in
  • Author Information

    JAMES R. MELVIN is a member of the Department of Economics at the University of Western Ontario.

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