Why is the Cobb-Douglas production function so popular?

Bert M. Balk ()
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Bert M. Balk: Erasmus University Rotterdam

Evolutionary and Institutional Economics Review, 2024, vol. 21, issue 1, No 1, 20 pages

Abstract: Abstract It is well known that, in continuous time, the Cobb-Douglas function can be derived from the underlying, data governing, accounting identity under some reasonable assumptions (factor shares are constant, and the weighted growth of the labour input price and the capital input price is constant). In this article these results are generalized in three ways: (1) the accounting identity contains a (pure) profit term; (2) continuous time is replaced by discrete time periods; (3) additional assumptions appear to be superfluous. The article also discusses extensions: from two to multiple inputs, from value added to gross output, and from a single production unit to an ensemble of those units.

Keywords: Productivity; Production function; Cobb-Douglas; Index number theory (search for similar items in EconPapers)
JEL-codes: C43 D24 E01 E23 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s40844-024-00279-x

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