A Note on a Constant Ratio Elasticity of Substitution (CRES) Production Function.

Alvin A. Cook

Expert InsightsPublished 1971

Discusses a generalization of the Constant Elasticity of Substitution (CES) production function, called the Constant Ratio Elasticity of Substitution (CRES) production function, in which the Allen pairwise partial elasticities of substitution are not constant but the ratio of any two partial pairwise elasticities is constant. By minimizing cost subject to an output constraint, the paper derives the sets of parameter values consistent with profit maximizing behavior. Although Dhrymes and Kurz assumed that the returns to scale could not be stated unambiguously, the author shows that the returns to scale can be calculated for a given set of inputs and a given set of parameter values. 13 pp. Ref. (Author)

Document Details

  • Copyright: RAND Corporation
  • Availability: Web Only
  • Year: 1971
  • Pages: 13
  • Document Number: P-4026-1

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Chicago Manual of Style

Cook, Alvin A., A Note on a Constant Ratio Elasticity of Substitution (CRES) Production Function. Santa Monica, CA: RAND Corporation, 1971. https://www.rand.org/pubs/papers/P4026-1.html.
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