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A Brief History of Production Functions

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Abstract

This paper gives an outline of evolution of the concept and econometrics of production function, which was one of the central apparatus of neoclassical economics. It shows how the famous Cobb-Douglas production function was indeed invented by von Thünen and Wicksell, how the Constant Elasticity of Substitution (CES) production function was formulated, how the elasticity of substitution was made a variable and finally how Sato’s function incorporated biased technical changes. It covers almost all specifications proposed during 1950 to 1975, as well as the linear-exponential (LINEX) production functions and incorporation of energy as an input. The paper is divided into single product functions, joint product functions, and aggregate production functions. It also discusses the ‘capital controversy’ and its impacts.

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  • S K Mishra, 2010. "A Brief History of Production Functions," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(4), pages 6-34, November.
    • Handle: RePEc:icf:icfjme:v:08:y:2010:i:3:p:6-34
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    More about this item

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)

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