Estimation of Returns to Scale and the Elasticity of Substitution

Econometrica ◽  
1967 ◽  
Vol 35 (3/4) ◽  
pp. 419 ◽  
Author(s):  
G. S. Maddala ◽  
J. B. Kadane
Keyword(s):  
Returns To Scale ◽  
Elasticity Of Substitution

scholarly journals Fonctions de production dans l’économie du Québec

2009 ◽  
Vol 54 (2) ◽  
pp. 176-206 ◽  
Author(s):  
Vittorio Corbo ◽  
Jean-Marie Dufour
Keyword(s):  
Strong Evidence ◽  
Economic Activity ◽  
Returns To Scale ◽  
Production Functions ◽  
Elasticity Of Substitution ◽  
True Model ◽  
Utilities Services ◽  
Capital Construction ◽  
Constant Returns To Scale ◽  
Work First

The purpose of this paper is to study the characteristics of the production process in the Quebec economy. We devote particular attention to two features of the technology: the returns to scale and the substitution possibilities. Two forms of production functions, the Cobb-Douglas and an homothetic translog production function, are estimated for six branches of economic activity. These are: Agriculture; Fishing and Forestry; Mining; Quarying and Oil Wells; Manufacturing; Utilities; Services. Two main conclusions are derived from this work. First, there is strong evidence of constant returns to scale in all branches of the Quebec economy but services. Second, when comparing the Cobb-Douglas model with an homothetic translog model, the hypothesis that the true model is the Cobb-Douglas one cannot be rejected for five of our six sectors. Therefore, there is evidence that the elasticity of substitution is around one. Finally a byproduct of our work has been the construction of capital stock series for the Quebec economy (1960-73) disaggregated into 14 sectors, and two types of capital: construction and machinery and equipment.

scholarly journals Intermetropolitan Comparisons Of Production Function

2011 ◽  
Vol 3 (2) ◽  
pp. 112
Author(s):  
Martin Williams ◽  
Tuan Ton-That
Keyword(s):  
Production Function ◽  
Production Technology ◽  
Returns To Scale ◽  
Elasticity Of Substitution ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Different Levels ◽  
Variable Returns To Scale ◽  
Inputs And Outputs

A nonhomogeneous production is used to study the features of the production technology across U.S. cities. We compute marginal productivities and scale elasticities for different levels of inputs and outputs. The form of the production function allows variable returns to scale. We can also test the Cobb-Douglas and constant elasticity of substitution forms within the nonhomogeneous specification. Conclusions are drawn concerning returns to scale across cities of different sizes.

scholarly journals SECTORAL ELASTICITY OF SUBSTITUTION AND RETURNS TO SCALE IN SOUTH AFRICA

2008 ◽  
Vol 76 ◽  
pp. S110-S125
Author(s):  
tewodros g. gebreselasie
Keyword(s):  
South Africa ◽  
Returns To Scale ◽  
Elasticity Of Substitution

scholarly journals The Two-level CES Production Function for the Manufacturing Sector of Pakistan

1989 ◽  
Vol 28 (1) ◽  
pp. 1-12 ◽  
Author(s):  
Ashfaque H. Khan
Keyword(s):  
Production Function ◽  
Technical Progress ◽  
Manufacturing Sector ◽  
Relevant Literature ◽  
Returns To Scale ◽  
Appropriate Technology ◽  
Production Functions ◽  
Elasticity Of Substitution ◽  
Two Factors ◽  
Factors Of Production

Production functions have been widely studied in the relevant literature. In this paper, apart from labour and capital, we have used energy as a factor input and calculated the elasticity of substitution between these inputs, measured technical progress, and determined the returns to scale in the manufacturing sector of Pakistan. Since we have more than two factors of production, the standard Cobb· Douglas and CES production functions do not provide satisfactory results. Hence, two·level (nested) CES production function becomes the natural choice for the appropriate technology. Using this technology, we have found low elasticity of substitution between the three factors of production. Furthermore, the manufacturing sector is found to exhibit decreasing returns to scale, having experienced disembodied technical progress at the rate of 3.7 percent per annum.

scholarly journals Production Function and Robotization - How Can CES Technology Help?

2021 ◽  
Author(s):  
Françoise Larbre
Keyword(s):  
Production Function ◽  
Returns To Scale ◽  
Production Functions ◽  
Elasticity Of Substitution ◽  
Cost Functions ◽  
Helpful Tool ◽  
Joint Product ◽  
Short Run ◽  
The Cost

Depending on the workers qualification, the use of robots is perceived either as a helpful tool or as a competitor. We analyze the substitution of capital for labor, including the case where the product is entirely made by robots. We use CES production functions and their derived cost functions (the later being surprisingly missing in the literature). We focus on short-run and the case of an elasticity of substitution greater than 1. We highlight a level of product for which the cost is identical regardless of the factor used. As a joint product, we provide a foundation to cost functions exhibiting first increasing and then decreasing returns to scale (a so far missing justification to the usually assumed shape of cost functions).

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