Technical change and the elasticity of factor substitution

Jürgen Antony

No 147, Beiträge der Hochschule Pforzheim from Pforzheim University

Abstract: This paper addresses the relationship between technical change and the elasticity of substitution between factors of production. It is shown how the elasticity within a CES production setting can change due to technical change. Technical change is interpreted in the spirit of horizontal differentiation as in many growth models. Cases for positive and negative returns to differentiation are analyzed which can be understood as progress or complexity congestions. It is shown how the elasticity changes due to technical choices for each of them.

Keywords: Elasticity of substitution; CES production function; Inequality (search for similar items in EconPapers)
JEL-codes: E23 F41 J24 O33 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-gro and nep-mac
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:pfobei:147

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