Modelling Fertiliser Demand in the Republic of Ireland: A Cost Function Approach

A translog cost function was used to obtain estimates of the own‐ and cross‐price demand elasticities for nitrogen, phosphorus and potassium. The results indicated a mean value for the own‐elasticities of —1.0, —0.6, —0.5 for N, P and K respectively. A test of the hypothesis of nutrient substitution was attempted. The test indicated that P and K were substitutable for N but not for each other. This result was corroborated by a zero elasticity of substitution estimate between phosphorous and potassium. A corollary of the results was the rejection on empirical grounds of the Cobb‐Douglas specification for the input demand functions. The latter function has traditionally been used in analyses of this nature.