The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Production Functions

  • Dale W. Jorgenson
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1895

Abstract

Traditionally, the production function was assumed to be additive and homogeneous. The constant elasticity of substitution (CES) production function adds flexibility by treating the elasticity of substitution as an unknown parameter, but retains the assumptions of additivity and homogeneity and imposes very stringent limitations on patterns of substitution. The dual formulation of production theory characterizes the production function by means of a dual representation such as a price or cost function, and generates explicit demand and supply functions as derivatives of the price or cost function.

Keywords

Bias of technical change CES production function Cobb–Douglas functions Cost flexibility Cost function Demand function Economies of scale Elasticity of substitution Hicks, J. Implicit function theorem Input–output analysis Jorgensen, D. W. Price function Production functions Simultaneous equations models Supply function Technical change 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Dale W. Jorgenson
    • 1
  1. 1.