The cobbdouglas production function is a special case of the constant elasticity of substitution ces production technology. Smirnov and kunpeng wangy department of mathematics and statistics dalhousie university halifax, nova scotia, canada b3h 3j5 october 22, 2019 abstract charles cobb and paul douglas in 1928 used data from the us manufacturing sector for 18991922 to introduce what is known today as the. Douglas, although antici pated by knut wicksell and, some have argued, j. The cobbdouglas production function y alk is still today the most ubiquitous form in theoretical and empirical analyses of growth and productivity felipe and adams, 2005.
French savant in studies on the cobbdouglas production function, there has sometimes been a footnote referring to its first use in economic theory. Finally, the paper empirically analyses the contribution rate of various influential factors to economic growth in china. Therefore, by utilizing the modified cobbdouglas production function model, the paper proposes a new method to calculate the contribution rate of a factor accurately. In economics, the cobb douglas production function is widely used to describe the relationship between output and input. Our consumer, skippy, wishes to maximize utility, denoted ux,y. It was instead developed because it had attractive mathematical characteristics, such as diminishing marginal returns to either factor of production and the property that expenditure on any. This concept can be applied at the level of individual.
Douglas used a special form of production function, which is known as the cobb douglas production function. The notation for the function is on page 11 of the pdf. Derivation of constant labor and capital share from the cobbdouglas production function sahand rabbani we will show that in the cobbdouglas production function model, the percentage of an economys income that is spent on labor and capital is constant. On the origin of the cobbdouglas production function. Example of cobb douglas production function the cobb douglas production function. The cobbdouglas functional form of production functions is widely used to represent the relationship of an output and two inputs. The introduction of the cobb douglas regression and its adoption by agricultural economists jeff e. During 19001947, charles cobb and paul douglas formulated and tested the cobb douglas production function through various statistical evidence. The cobbdouglas production function 1 introduction in general, a productionfunctionis a speci. The cobbdouglas production function economics discussion.
A stochastic theory of the generalized cobbdouglas. Dreze in this paper we consider the specification and estimation of the cobbdouglas production function model. The case of a converging economy article pdf available in finance a uver 57910. However, in this case wc may encoun ter a high degree of relationship bet\veen yo yl and yf in tlic sample, resulting in large standard errors 3f y1 and yr in equation 4. An application of genetic algorithm approach and cobb. Berbagai fungsi produksi telah banyak dibahas dalam literatur. Q b0 x y b1 b2 the cobbdouglas functional form of production functions is widely used to represent the relationship of an output and two inputs. Let us now find out the implications of returns to scale on the cobbdouglas production function. I am trying to understand a paper written back in 1989 about long run population growth. Notation of a cobbdouglas function printed in 1989.
Cobbdouglas production function is a model that tells us about the relationship between total product, total factor productivity, quantities of labor and capital and their output elasticities the cobbdouglas production function is the most widely used production function because it allows different combination of labor and capital. Cobb douglas production function question closed ask question asked 2 years, 11 months ago. Since were doing macroeconomics we will be considering. A twoinput cobbdouglas production function with isoquants. Notes on labor demand under a cobbdouglas technology. The mrs and the cobbdouglas simon fraser university. During 19001947, charles cobb and paul douglas formulated and tested the cobbdouglas production function through various statistical evidence. In other words, log y is a linear function of log x1 and log x2. An application of non linear cobbdouglas production. The cobbdouglas function is widely used to represent production functions and also utility functions in economics.
It has become known as the cobbdouglas production function. The cobb douglas production function with more than two independent variables can be described as follows 17. Two different sources seem to be prevailing in these references. The transformed function is the equation for a simple two variable regression line in which all observations in the data set used. Metode cobb douglas ini relatif lebih sederhana dan mudah dipahami, karena besaran koefisien pangkat dari fungsi produksi cobb douglas secara langsung. In one way or another economists and students of economics are all familiar with this paper. A theory of production charles cobb and paul douglas a copy of the paper can be found here.
On the origin of the cobbdouglas production function by bo sandelin summary les origines sont toujours obscures. Moyazzem hossain, tapati basak, ajit kumar majumder. We have taken the classical production function having two inputs, capital and labour. The cobbdouglas production function is the widely used function in econometrics. It seems like the pdf is a scanned image of the paper. The mrs and the cobbdouglas consider a twogood world, xand y. The cobbdouglas production function is then given byy ak. The cobbdouglas production function, given by charles w. The cobbdouglas regression and the measurement of economic growth and its causes jeff biddle dept. In economics, more precisely econometrics, the cobbdouglas production function is a particular functional form of the production function, widely used to represent the technological relationship between the amounts of two or more inputs, particularly physical capital and. The cobb douglas function is widely used to represent production functions and also utility functions in economics. Wiregrid cobbdouglas production surface with isoquants. A famous case is the well known cobbdouglas production function introduced by charles w.
On the one hand were highlighted conditions for the existence of the cobbdouglas function. Application of nonlinear cobbdouglas production function with autocorrelation problem to selected manufacturing industries in bangladesh. Cobb douglas production function and the marginal rate of technical substitution cost minimisation duration. The cobbdouglas production function used and estimated by cobb and douglas 1928, and in each of the subsequent timeseries papers, takes the following form. It is a linear homogeneous production function of degree one which takes into account two inputs, labour and capital, for the entire output of the. Asheim, econ423035 1 cobbdouglas examples in consumer theory lectures in microeconomic theory fall 2006 25. Use mathematical analysis to show that the cobbdouglas production function is consistent with the law of diminishing returns in the short run. While discussing the production theory of the firm, economists c. Douglas used a special form of production function, which is known as the cobbdouglas production function. Pdf the complete theory of cobbdouglas production function. In economics, a production function is an equation that describes the relationship between input and output, or what goes into making a certain product, and a cobbdouglas production function is a specific standard equation that is applied to describe how much output two or more inputs into a production process make, with capital and labor being the typical inputs described. Students run into it over and over again in problem sets and economists. Free scirp newsletters scientific research publishing. School of economics cobbdouglas production function.
Douglas is a linear homogeneous production function, which implies, that the factors of production can be substituted for one another up to a certain extent only. Explain the properties of cobbdouglas production function. Denote aggregate output by y, the input of capital by k, and the input of labour by l. A functional form, named after its originators, that is widely used in both theoretical economics and applied economics as both a production function and a utility function. Cobbdouglas production functions is a functional relationship between input and out put. This paper examines the nigerian economy from 1990 to 2009 and uses the. The cobbdouglas production function revisited roman g. The cobbdouglas production function is based on the empirical study of the american manufacturing industry made by paul h. Use of cobb douglas production model on some selected manufacturing industries in oman article pdf available in education business and society contemporary middle eastern issues 32. Iin the meantime, cobb 1930 had published a paper on his own using the n the meantime, cobb 1930 had published a paper on his own using the.
If we are to increase all inputs by c amount c is a constant, we can judge the impact on output as under. Compared to standard flexible functions such as the translog. Soekartawi 2002 mendefinisikan fungsi produksi cobb douglas adalah suatu fungsi atau persamaan yang melibatkan dua atau lebih variabel, dimana variabel yang satu disebut dengan variabel dependen, yang dijelaskan y dan. It takes its name from professor onetime senator douglas who, from empirical observation, inferred its properties, and to his colleague cobb, a mathematician, who suggested the mathematical form which had those properties. The paper treats various aspects concerning the cobbdouglas production function. It has become known as the cobb douglas production function. Lecture notes in economics and mathematical systems, vol 332. Cobbdouglas production function contains the following useful. Of the marshallian type of function, the best known and the most widely used is the cobbdouglas production function. The cobbdouglas production function 173 the resulting equation is referred to as linear in the parameters or linear in the coefficients. Cobb douglas cd production function is of the form.
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