Constant Elasticity of Substitution Production

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This is a visualization of the constant elasticity of substitution (CES) production function. Commonly used in econometrics, it determines the output as given input factors (e.g. labor and capital) are changed. The amount of change seen in the inputs is described by the actual elasticity of substitution value.

Contributed by: Kevin Balch and Seth J. Chandler (March 2011)
Open content licensed under CC BY-NC-SA


Snapshots


Details

The actual equation is as follows:

= output; = factor productivity; = share parameter; & = primary production factors

; = Elasticity of substitution

At , the constant elasticity production function is equivalent to the Cobb–Douglas production function.



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