The Morishima gross elasticity of substitution
We show that the Hotelling-Lau elasticity of substitution, an extension of the Allen-Uzawa elasticity to allow for optimal output-quantity (or utility) responses to changes in factor prices, inherits all of the failings of the Allen-Uzawa elasticity identified by Blackorby and Russell [1989 AER]. An analogous extension of the Morishima elasticity of substitution to allow for output quantity changes preserves the salient properties of the original Hicksian notion of elasticity of substitution.
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Volume (Year): 28 (2007)
Issue (Month): 3 (December)
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- Bertoletti Paolo, 2001. "The Allen/Uzawa Elasticity of Substitution as a Measure of Gross input Substitutability," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 87-94.
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- Paolo Bertoletti, 2005. "Elasticities of Substitution and Complementarity: A Synthesis," Journal of Productivity Analysis, Springer, vol. 24(2), pages 183-196, October. Full references (including those not matched with items on IDEAS)