Why does production function take the Cobb–Douglas form?

Atushi Ishikawa (), Shouji Fujimoto and Takayuki Mizuno
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Atushi Ishikawa: Kanazawa Gakuin University
Shouji Fujimoto: Kanazawa Gakuin University
Takayuki Mizuno: The Graduate University for Advanced Studies

Evolutionary and Institutional Economics Review, 2021, vol. 18, issue 1, No 5, 79-102

Abstract: Abstract We directly observed a Cobb–Douglas symmetric plane using the index of surface openness, which is used in geography, and successfully identified it. Based on this observation, we measured the capital shares (capital elasticity) and labor shares (labor elasticity) and compared them with the results of multiple regression analysis used in economics. We confirmed consistent agreement in seven countries: Japan, Germany, France, Spain, Italy, the UK, and the Netherlands. Thus, we show that the Cobb–Douglas production function can be clearly captured in empirical data as a geometric entity with a quasi-inverse symmetry of variables. Based on the above discussion, we theoretically clarified why the Cobb–Douglas production function is better fitted to empirical data in economics, because it uniquely derives the fact that its variable follows a power-law distribution.

Keywords: Cobb–Douglas production function; Quasi-inverse symmetry; Surface openness; Power law (search for similar items in EconPapers)
JEL-codes: E0 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s40844-020-00180-3

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