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On the Function Coefficient, Euler's Theorem, and Homogeneity in Production Theory

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  • Bruce R. Beattie
  • Matthew T. Holt
  • Myles J. Watts

Abstract

This paper makes three related points useful in teaching first-year graduate production theory. First, the local applicability of the classical function coefficient idea for short-run nonhomogeneous production technologies is shown for returns to scale, satisfaction of second-order and total conditions for profit maximization, and delineation of the economic region of production in factor space. Second, the general applicability of Euler's Theorem results to nonhomogeneous (variable-proportional-return) cases is developed. Lastly, it is shown that short-run, nonhomogeneous production/yield functions are fully consistent with long-run linear homogeneity. Copyright 2002, Oxford University Press.

Suggested Citation

  • Bruce R. Beattie & Matthew T. Holt & Myles J. Watts, 2002. "On the Function Coefficient, Euler's Theorem, and Homogeneity in Production Theory," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 240-249.
    • Handle: RePEc:oup:revage:v:24:y:2002:i:1:p:240-249
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    File URL: http://hdl.handle.net/10.1111/1467-9353.00094
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    1. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
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