©The Pakistan Development Review 46 : 4 Part II (Winter 2007) pp. 517–536 Management of Energy Recourses, Marginal Input- Output Coefficients, and Layers of Techniques: A Case Study of US Chemical Industry TOSEEF AZID, MUMTAZ ANWAR, and M. JUNAID KHAWAJA * The embodied technical change should reduce the cost of production of the commodity. However, price structure, wages and interest rates also will change over time. Thus if a commodity is following a fixed price regime, the adjustment of a historical input-output table to current price wage level will leaves less and less profit per unit of output. The extent of this reduction will indicate the extent of technological change. There are different approaches to the prediction of changes in input-output coefficients. The first approach, attributable to Leontief (1941) and Stone (1962), assumes that input-output matrices change over time in a “biproportional” way. The other approach is to estimate trends in individual coefficients using statistical data. Former approach is used by a number of experts, including Fontela, et al. (1970), Almon, et al. (1974) and Carter (1970). Arrow and Hoffenberg (1959), Henry (1974), Savaldson (1970, 1976), Ozaki (1976), Aujac (1972) and Buzunov (1970). These are examples of the application of the quantitative approach for forecasting input-output coefficients. Still another approach which could not get much attention for forecasting input-output coefficients, is constructing the marginal input-output coefficients [Tilanus (1967); Middelhoek (1970)]. Marginal coefficients for forecasting constructed by Tilanus and Middelhoek are based on average input-output tables, which shows that still new approach (marginal) is based on the old (average) one. However, Professor Mathur (1977, 1986a, 1986b, 1989, 1990) was interested in both types of firms, i.e., best-practice and least efficient. According to him, in translating the extra final demand of macro-models, the best-practice coefficients will be more useful than the average ones, whereas in assessing the incidence of obsolescence, unemployment, etc., the least efficient coefficients will be the more appropriate ones. In the following sections the discussion will be based more on the Professor Mathur’s work. His approach was also later on discussed theoretically and empirically by Azid (1993), Law and Azid (1993), Azid and Law (1994, 1995), Azid and Ghosh (1998) and Azid and Noor (2000), Azid (2002). Toseef Azid <toseefazid@bzu.edu.pk> is Professor of Economics, Bahauddin Zakariya University, Multan. Mumtaz Anwar <mumtaz_anwar@yahoo.com> is Assistant Professor, Department of Economics, Punjab University, Lahore. M. Junaid Khawaja <mjunkh@hotmail.com> is Assistant Professor, Abu Dhabi University, UAE.