Output Frontier Simulations with Joint Cobb-Douglas Production Functions and Variability in both Returns to Scale and Input Intensities

Patrick Alexandre () and Jules Gazon
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Jules Gazon: University of Liège (Belgium) Faculty of Econonomics, Management and Social Sciences Department of Economics Service of International and Interregional Economics (SEII), http://www.egss.ulg.ac.be

SEII Working Papers from University of Liège Faculty of Econonomics, Management and Social Sciences Department of Economics Service of International and Interregional Economics

Abstract: Convex output set is common hypothesis in both production theory and empirical applications such as the Data Envelopment Analysis. It seems to be taken for granted without any reference to returns to scale. This paper presents simulations for joint Cobb-Douglas production functions. The output frontier shape is showed to depend on two contrary forces. On the one hand, the higher the returns to scale, the more convex to the origin the output frontier. On the other hand, the larger the difference in input intensities of each production unit, the more concave to the origin the output frontier.

Keywords: output; frontier; simulations; Cobb-Douglas; production function; increasing; returns to scale; input; intensity; frontière; production; économies d'échelle; rendements croissants (search for similar items in EconPapers)
JEL-codes: B4 C00 D2 (search for similar items in EconPapers)
Date: 1999-10-27
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Persistent link: https://EconPapers.repec.org/RePEc:sei:seiiwp:991003

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