This paper examines ELASTICITY of SUBSTITUTION among electricity, other energy materials and capital in IR. Iran chemical industry, using time series data between (1998-2007). This analysis uses Tran slog production and cost functions due to their economic properties and production inputs are categorized into four categories including capital, labor, electricity and other energy materials. This production function were used to estimate the own, cross price, Morishima and Alen ELASTICITY. The Morishima ELASTICITY for capital-electricity estimated 1.588 and Alen ELASTICITY for capital and other materials estimated 0.698. Cross ELASTICITY between electricity and other materials was equal to (-1.363). So that the results of this paper indicate that capital, electricity and labor substitute each other. But electricity and other energy materials are found to be complements.

In this Study, We applied Translog cost function with four Input (Labor, Capital, Energy and Material) and ISUR method for analysis of the cost structure of 11 most Energy intensive sub sector industries (With 4 Digit ISIC code) of Manufacture of other Non-Metallic Mineral Products (Code 26) and Manufacture of Basic Metals (Code 27) during the period 1375-87. Input Share, Economies of Scale, Minimum Efficient Scale, Own-cross price ELASTICITY and Morishima ELASTICITY of SUBSTITUTION were calculated. The important results of this study is the detection of Scale effects, which reveals possibilities for increasing Scales (products) and reducing costs. The result of Cross-price and Morishima ELASTICITY of SUBSTITUTION shows that all Input SUBSTITUTION elasticities are Elastic. This case indicates that the Firm's Manager of Energy intensive industries have a lot of options to substitute one input for the other inputs.

This paper intends to estimate the energy demand function in industry section based on the two-stage optimization approach. Consequently, it defines the SUBSTITUTION ELASTICITY between inputs. Energy demand estimation in various sections makes it feasible to define energy policies. At the first phase the key influential factors on the energy demand function estimation in industry section which is one of high consumption section, were defined and at the next phase the elements of energy demand were determined through logit function and seemingly unrelated regression estimation and price and SUBSTITUTION ELASTICITY were calculated.

The main goal of this paper is to estimate the ELASTICITY of SUBSTITUTION between energy and other factors of production by using a multi-stage CES production function. In order to achieve this goal, we design a nested CES production function with four inputs, labor, capital, energy and investment in research and development for Iranian economy. This nonlinear production function is estimated by continuous genetic algorithms method. This method is relatively more efficient than traditional econometrics approach. In the first stage, three different functions are estimated and the best one is selected. In the next stage, we have calculated the ELASTICITY of SUBSTITUTION between energy and other inputs of production. Our choice of nonlinear production function, the explanatory variables, and also the estimation method make this research different from those already done for Iran. The results indicate that one percent increase in labor force reduces energy consumption by 0.56 percent. We also find that one percent increase in physical capital decreases energy use by 0.59 percent, and similarly one percent increase in investment in R&D (Research and Development) might reduce energy consumption by 0.46 percent. Furthermore, we calculate marginal products of different input for various years and observe that the marginal product of labor has increased after Iran-Iraq imposed war. Moreover the marginal product of energy has increased since 1995. This might be a result of energy saving policy implemented in Iran after this year.