The Morishima Gross Elasticity of Substitution

Charles Blackorby, Daniel Primont and R. Robert Russell
Additional contact information
Daniel Primont: Southern Illinois University
R. Robert Russell: University of California, Riverside

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We show that the Hotelling-Lau elasticity of substitution, an extension of the Allen-Uzawa elasticity to allow for optimal output-quantity (or utility) responses to changes in factor prices, inherits all of the failings of the Allen-Uzawa elasticity identified by Blackorby and Russell [1989 AER]. An analogous extension of the Morishima elasticity of substitution to allow for output quantity changes preserves the salient properties of the original Hicksian notion of elasticity of substitution.

Keywords: elasticity of substitution; relative factor shares; homotheticity (search for similar items in EconPapers)
JEL-codes: D11 D24 D33 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2007
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Citations: View citations in EconPapers (15)

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Journal Article: The Morishima gross elasticity of substitution (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:787

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