IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v34y2011i2p275-294.html
   My bibliography  Save this article

On Herbert Simon's criticisms of the Cobb-Douglas and the CES production functions

Author

Listed:
  • Jesus Felipe
  • John McCombie

Abstract

Scott Carter (2011) reproduces and discusses correspondence between Simon and Solow in 1971, where Simon first outlined his critique that estimations of production functions merely capture an underlying accounting identity. This idea culminated in a paper published by Simon in 1979 in the Scandinavian Journal of Economics. We extend Simon's argument that production functions should ideally be estimated using physical data, and discuss the serious problems that arise when they are estimated using constant-price monetary data. Simon also suggested that the good statistical fits to production functions could be derived from a markup pricing model, but he did not follow this up. We show that this can indeed account for the very good statistical fits of the Cobb-Douglas and other production functions. We conclude by showing how estimates of cost functions suffer from the same problem.

Suggested Citation

  • Jesus Felipe & John McCombie, 2011. "On Herbert Simon's criticisms of the Cobb-Douglas and the CES production functions," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(2), pages 275-294.
    • Handle: RePEc:mes:postke:v:34:y:2011:i:2:p:275-294
    DOI: 10.2753/PKE0160-3477340205
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2753/PKE0160-3477340205
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.2753/PKE0160-3477340205?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:34:y:2011:i:2:p:275-294. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.