The cobb-douglas function as an approximation of other functions

Frédéric Reynès ()
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Frédéric Reynès: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po

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Abstract: By defining the Variable Output Elasticities Cobb-Douglas function, this article shows that a large class of production functions can be approximated by a Cobb-Douglas function with nonconstant output elasticity. Compared to standard flexible functions such as the Translog function, this framework has several advantages. It requires only the use of the first order approximation while respecting the theoretical curvature conditions of the isoquants. This greatly facilitates the deduction of linear input demands function without the need of involving the duality theorem. Moreover, it allows for a generalization of the CES function to the case where the elasticity of substitution between each pair of inputs is not necessarily the same.

Keywords: flexible production functions; Cobb-Douglas function; CES function (search for similar items in EconPapers)
Date: 2011-10
Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-01069515
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