New Study Reveals Limits of Constant Elasticity of Substitution in Production Functions
The article explores how the CES property influences production functions. It shows that not all two-variable production functions with the CES property can be explicitly identified. If a production function is a quasi-sum, the CES property only determines the inner functions' forms. When homogeneity is added, the production function is either CD or ACMS. This expands on previous research and clarifies the proof for certain cases.
