Capital-labor substitution and economic efficiency
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Cites background from "Capital-labor substitution and econ..."
...An important class of functions satisfying the assumptions listed above is the class of constant elasticity of substitution (CES) production functions F[xo(t), x~(t)] = {6 [~-~Co(t)] -~ + (1 - 6)[¢r~x~(t)]-~} -1/~, (11) where 6 is a distribution parameter independent of o....
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...When cr = 0o in the production function (11), the production function is not differentiable along the ray ~roXo(t) = ~ r ~ ( t ) ; (55)...
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...Another case, which deserves mention, because of its extensive treatment in the economics literature, although it is not qualitatively different from the general case for our purposes, is the celebrated CobbDouglas production function, obtained by taking the limit of (11) as o- ~ 0....
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