This paper extends the fossil production function to incorporate embodied technical change. The fossil production function provides an alternative to the standard neoclassical explanation for the aggregate production function. In a Classical Ricardian spirit, the paper assumes that capital-using, labour saving technical change prevails, and shows that it generates a fossil production function in Cobb-Douglas form. The power term of the production function mediates the viability of new machines. A sufficient condition for viability is that the power term equals or exceeds the profit share on new machines. Empirical estimates show that this sufficient condition is satisfied, a result inconsistent with the neoclassical interpretation of the aggregate production function. Copyright 2002 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia
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