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.

The Allocation of Labor and Endogenous Search Decisions

2006 ◽  
Vol 6 (1) ◽  
pp. 1-31
Author(s):  
Lawrence Uren
Keyword(s):  
Comparative Advantage ◽  
Multiple Equilibria ◽  
Returns To Scale ◽  
Investment Decisions ◽  
Production Functions ◽  
Search Frictions ◽  
Constant Returns To Scale

This paper examines the allocation of heterogeneous workers across sectors of an economy in which workers are able to direct their search towards particular firms. We find that search frictions, in addition to causing unemployment, may result in an inefficient allocation of labor. This result arises because of the interaction between the investment decisions of firms and the search decisions of workers. Despite constant returns to scale in both the matching and production functions, this interaction can generate multiple equilibria. The existence of multiple equilibria is shown to depend crucially on the direction of comparative advantage.

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).

scholarly journals Breaking Say’s law in a simple market economy model

2020 ◽  
Vol 39 (81) ◽  
pp. 897-918
Author(s):  
Carlos Humberto Ortiz Quevedo ◽  
Rodrigo Castillo Rentería
Keyword(s):  
Market Economy ◽  
Economic Activity ◽  
Capital Accumulation ◽  
Aggregate Demand ◽  
Returns To Scale ◽  
Increasing Returns ◽  
Market Size ◽  
Increasing Returns To Scale ◽  
Production Factors ◽  
Constant Returns To Scale

This paper analyses a multi-sector market economy where preferences are non-homothetic and satiable. Capital and labour are the production factors. Food and manufactured goods are produced with a constant-returns-to-scale technology and an increasing-returns-to-scale technology, respectively. Results include: an original capital accumulation process is required for manufacturing industrialization to take place, a minimum market size is needed for the economy to operate, and capital property concentration diminishes aggregate demand. Full general equilibrium is possible for intermediate degrees of capital concentration, but the price system collapses under high degrees as an economy regulator, labour unemployment is unavoidable, and a minimum wage is justified to enhance economic activity.

scholarly journals A NOTE ON THE CHARACTERIZATION OF THE NEOCLASSICAL PRODUCTION FUNCTION

2016 ◽  
Vol 21 (7) ◽  
pp. 1827-1835
Author(s):  
Andreas Irmen ◽  
Alfred Maußner
Keyword(s):  
Production Function ◽  
Returns To Scale ◽  
Production Functions ◽  
Alternative Characterization ◽  
Factors Of Production ◽  
Constant Returns To Scale

We study production functions with capital and labor as arguments that exhibit positive, yet diminishing marginal products and constant returns to scale. We show that such functions satisfy the Inada conditions if (i) both inputs are essential and (ii) an unbounded quantity of either input leads to unbounded output. This allows for an alternative characterization of the neoclassical production function that altogether dispenses with the Inada conditions. Although this proposition generalizes to the case of n > 2 factors of production, its converse does not hold: 2n Inada conditions do not imply that each factor is essential.

scholarly journals An Analysis of Production Relations in the Large-scale Textile Manufacturing Sector of Pakistan

1989 ◽  
Vol 28 (1) ◽  
pp. 27-42 ◽  
Author(s):  
Sohail J. Malik ◽  
Mohammad Mushtaq ◽  
Hina Nazli
Keyword(s):  
Large Scale ◽  
Manufacturing Sector ◽  
Returns To Scale ◽  
Manufacturing Industries ◽  
Elasticity Of Substitution ◽  
Production Structure ◽  
Textile Manufacturing ◽  
Production Relations ◽  
Employment Generation ◽  
Constant Returns To Scale

This paper attempts to determine econometrically the underlying production relations for the large-scale textile manufacturing sector of Pakistan, based on data available from the siX most recent censuses of large-scale manufacturing industries. The cOllariance model is used for pooling the provincial data. Testing for alternative forms reveals that the CES production function with constant-returns-to-scale most adequately explains the underlying production structure. The estimates of the elasticity of substitution are significantly different from zero in all cases, implying significant and efficient employment generation possibilities.

scholarly journals INDETERMINACY, BIFURCATIONS, AND UNEMPLOYMENT FLUCTUATIONS

2008 ◽  
Vol 12 (S1) ◽  
pp. 75-89 ◽  
Author(s):  
FRÉDÉRIC DUFOURT ◽  
TERESA LLOYD-BRAGA ◽  
LEONOR MODESTO
Keyword(s):  
Steady State ◽  
Returns To Scale ◽  
Elasticity Of Substitution ◽  
Hopf Bifurcations ◽  
Stability Conditions ◽  
Simple Extension ◽  
Unemployment Benefits ◽  
Local Dynamics ◽  
Labor Taxation ◽  
Constant Returns To Scale

We incorporate imperfectly insured unemployment in the finance constrained economy proposed by Woodford (1986), by introducing unions and unemployment benefits financed by labor taxation. We show that this simple extension of the Woodford model changes drastically its stability conditions and local dynamics around the steady state. In fact, in contrast to related models in the literature, we find that, under constant returns to scale in production: (i) indeterminacy always prevails in the case of a unitary elasticity of substitution between capital and labor and (ii) flip and Hopf bifurcations occur for empirically credible elasticities of substitution between capital and labor, so that a rich set of dynamics may emerge at “realistic” parameters' values.

scholarly journals General Equilibrium Oligopoly and Ownership Structure

Econometrica ◽  
2021 ◽  
Vol 89 (3) ◽  
pp. 999-1048
Author(s):  
José Azar ◽  
Xavier Vives
Keyword(s):  
General Equilibrium ◽  
Ownership Structure ◽  
Returns To Scale ◽  
Weighted Average ◽  
Elasticity Of Substitution ◽  
Real Wages ◽  
Ownership Structures ◽  
Pecuniary Externality ◽  
Common Ownership ◽  
Constant Returns To Scale

We develop a tractable general equilibrium framework in which firms are large and have market power with respect to both products and labor, and in which a firm's decisions are affected by its ownership structure. We characterize the Cournot–Walras equilibrium of an economy where each firm maximizes a share‐weighted average of shareholder utilities—rendering the equilibrium independent of price normalization. In a one‐sector economy, if returns to scale are non‐increasing, then an increase in “effective” market concentration (which accounts for common ownership) leads to declines in employment, real wages, and the labor share. Yet when there are multiple sectors, due to an intersectoral pecuniary externality, an increase in common ownership could stimulate the economy when the elasticity of labor supply is high relative to the elasticity of substitution in product markets. We characterize for which ownership structures the monopolistically competitive limit or an oligopolistic one is attained as the number of sectors in the economy increases. When firms have heterogeneous constant returns to scale technologies, we find that an increase in common ownership leads to markets that are more concentrated.

scholarly journals Do traders learn to select efficient market institutions?

2021 ◽  
Author(s):  
Carlos Alós-Ferrer ◽  
Johannes Buckenmaier ◽  
Georg Kirchsteiger
Keyword(s):  
Returns To Scale ◽  
Production Costs ◽  
Switching Behavior ◽  
Double Auction ◽  
Trading Behavior ◽  
Market Institutions ◽  
Market Institution ◽  
Simple Rules ◽  
Rules Of Thumb ◽  
Constant Returns To Scale

AbstractWhen alternative market institutions are available, traders have to decide both where and how much to trade. We conducted an experiment where traders decided first whether to trade in an (efficient) double-auction institution or in a posted-offers one (favoring sellers), and second how much to trade. When sellers face decreasing returns to scale (increasing production costs), fast coordination on the double-auction occurs, with the posted-offers institution becoming inactive. In contrast, under constant returns to scale, both institutions remain active and coordination is slower. The reason is that sellers trade off higher efficiency in a market with dwindling profits for biased-up profits in a market with vanishing customers. Hence, efficiency alone might not be sufficient to guarantee coordination on a single market institution if the surplus distribution is asymmetric. Trading behavior approaches equilibrium predictions (market clearing) within each institution, but switching behavior across institutions is explained by simple rules of thumb, with buyers chasing low prices and sellers considering both prices and trader ratios.

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
Sign in / Sign up

Export Citation Format

Share Document