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Why does production function take the Cobb–Douglas form?

Author

Listed:
  • Atushi Ishikawa

    (Kanazawa Gakuin University)

  • Shouji Fujimoto

    (Kanazawa Gakuin University)

  • Takayuki Mizuno

    (The Graduate University for Advanced Studies)

Abstract

We directly observed a Cobb–Douglas symmetric plane using the index of surface openness, which is used in geography, and successfully identified it. Based on this observation, we measured the capital shares (capital elasticity) and labor shares (labor elasticity) and compared them with the results of multiple regression analysis used in economics. We confirmed consistent agreement in seven countries: Japan, Germany, France, Spain, Italy, the UK, and the Netherlands. Thus, we show that the Cobb–Douglas production function can be clearly captured in empirical data as a geometric entity with a quasi-inverse symmetry of variables. Based on the above discussion, we theoretically clarified why the Cobb–Douglas production function is better fitted to empirical data in economics, because it uniquely derives the fact that its variable follows a power-law distribution.

Suggested Citation

  • Atushi Ishikawa & Shouji Fujimoto & Takayuki Mizuno, 2021. "Why does production function take the Cobb–Douglas form?," Evolutionary and Institutional Economics Review, Springer, vol. 18(1), pages 79-102, April.
    • Handle: RePEc:spr:eaiere:v:18:y:2021:i:1:d:10.1007_s40844-020-00180-3
    DOI: 10.1007/s40844-020-00180-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Cobb–Douglas production function; Quasi-inverse symmetry; Surface openness; Power law;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

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