Arguing A Case For The Cobb-Douglas Production Function
AbstractThe paper argues that Cobb-Douglas (CD) production function merits use for analysing the production process, not because it should be looked upon as a simple tool which can be handled easily or as a crude remedy for estimation, but because of the advantages it possesses. These advantages are due to the fact that it can handle multiple inputs in its generalised form. Even in the face of imperfections in the market it does not introduce distortions of its own. Unconstrained CD-function further increases its potentialities to handle different scales of production. Various econometric estimation problems, such as serial correlation, hetroscidasticity and multicolinearity can be handled adequately and easily. It is argued that most of its criticism is focussed on its inflexibility and admits that except for one obvious assumptions all other assumptions can be relaxed. It is further argued that it facilitates computations and has the properties of explicit representability, uniformity, parsimony and flexibility. Even the problem of simultaneity can be overcome. The paper argues that aggregate technology can also be well represented by it.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Econometrics with number 0409012.
Length: 11 pages
Date of creation: 25 Sep 2004
Date of revision:
Note: Type of Document - doc; pages: 11
Contact details of provider:
Web page: http://22.214.171.124
Production; Functional Form;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-30 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lau, Lawrence J., 1986. "Functional forms in econometric model building," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 26, pages 1515-1566 Elsevier.
- Jules Leichter & Cristina Mocci & Stefania Pozzuoli, . "Measuring External Competitiveness:An Overview," Working Papers 2, Department of the Treasury, Ministry of the Economy and of Finance.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.