Production Functions with Variable Elasticity of Factor Substitution: Some Analysis and Testing

On the Production Function with Variable Elasticity of Factor Substitution

“…Finally we point out here an interesting result of Sato (1967) and Sato and Hoffman (1968), who proved that if the elasticity of factor substitution is a linear function of the capital labor ratio,…”

“…As a consequence of the paper published by Arrow et al, the next decades have witnessed an enormous increase in the amount of papers dedicated to the study of production functions. Among these papers, we mention here only those with a significant impact on the later developments, as it was the case of the papers of: Uzawa (1962Uzawa ( , 1967, McFadden (1963), Liu and Hildebrand (1965), Dhrymes (1965), Kmenta (1967), Sato (1967Sato ( , 1970Sato ( , 1975Sato ( , 1980, Sato and Hoffman (1968), Lu and Fletcher (1968), Zellner and Revankar (1969), Revankar (1971), Beckman et al (1972), Kim (1992), De La Grandville (1997) and Barellia and Pessôa (2003).…”

Reducing the Administrative Expenditures as Source for Increasing the Efficiency of Local Governance Under Conditions of the Financial Crisis

“…In this context Arow, Chenery, Minhas and Solow(1961), Klump and Grandville (2000), Karagianis, Palivos and Papageorgiou (2004), Lovell (1973), Sato and Hoffman (1968), Zaman and Goschin (2007) et al focus especially on work and capital production factors, the actual approaches incorporating technological progress evolutions that, on the one hand determine "the growth of factors consumption" and, on the other hand, caused "the growth of complex highly qualified work" and "the growth of highly qualified work consumption and the poorly qualified work saving/replacement" completed with "the capital consumption at high technological level " (Zaman and Goschin, 2007, 3-4). These tendencies generate significant changes in substitution elasticity of different production factors depending on the one hand on the level of social-economical development and, on the other, on factors such as market globalization, connectivity and interdependences and interoperability growth in world economy as a result of information and communication technology extension, new managerial approaches and best practices generalizations and market emergence growth etc.…”

A Brief History of Production Functions

“…It may be noted that the assumption of minimal cost conditions and use of factor shares in defining the elasticity of substitution limit the importance of this function in empirical investigation. Ryuzo Sato and Hoffman ((1968) also introduced their variable elasticity of production function.…”