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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 neo-classical economics. It shows how the famous Cobb-Douglas production function was indeed invented by von Thunen and Wicksell, how the 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 1950-1975, and further the LINEX production functions and incorporation of energy as an input. The paper in divided into (1) single product functions, (2) joint product functions, and (3) aggregate production functions. It also discusses the ‘capital controversy’ and its impacts.

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  • Mishra, SK, 2007. "A Brief History of Production Functions," MPRA Paper 5254, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:5254
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    References listed on IDEAS

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    6. Gronau, Reuben, 1977. "Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1099-1123, December.
    7. Dhrymes, Phoebus J & Mitchell, B M, 1969. "Estimation of Joint Production Functions," Econometrica, Econometric Society, vol. 37(4), pages 732-736, October.
    8. A. Cohen & G. Harcourt., 2009. "Whatever Happened to the Cambridge Capital Theory Controversies?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
    9. Sudhanshu Mishra, 2007. "Least squares estimation of joint production functions by the differential evolution method of global optimization," Economics Bulletin, AccessEcon, vol. 3(51), pages 1-13.
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    More about this item

    Keywords

    Production function; Cobb-Douglas; CES; Transcendental; translog; Zellner-Revankar; VES; Bruno; Kadiyala; Diewert; Kummel; Mundlak; Engineering production function; Multi-output; joint product; Data Envelopment; Household production function; Humbug production function; capital controversy; Cambridge controversy;

    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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