This note addresses some issues that arise when using “normalized” CES production functions, an approach that has become popular in the literature. The results of Klump and de La Grandville (2000) provide a simple way to calibrate the parameters of the CES production function when the necessary data are available. But some of the other applications of normalized CES production functions appear ...

In Technical Functions – On the Use and Design of Artifacts, Wybo Houkes and Pieter Vermaas have developed a theory of technical functions that focuses on the attribution of technical functions to artifacts. They aim at a non-essentialist account of technical functions by reference to use-plans. ‘Use plan’ means, a more or less standardized way of manipulating objects in order to realize a prac...

Player i's payoff in a noncooperative game is generally expressed as a function of the vector of strategies of all players. However, in some games 'simply reducible games' the payoff of player i is a function of two arguments the strategy chosen by i, and the sum of the strategies of all players in the game. Cournot oligopoly, public good provision, costand surplus-sharing, and open access reso...

We reconsider the CES production functions, focusing on their additive separability properties and the constraints these impose on dual elasticites of gross substitution and complementarity. In particular, we offer some alternative characterizations of the (standard) homogeneous cases that seem to have gone unnoticed, as far as we know. We also start exploring the cases of the (additively separ...

The set of Cobb-Douglas production functions is usually fitted by first linearizing the models through logarithmic transformation and then applying method of least squares. However, this procedure is valid only when the underlying assumption of multiplicative error-terms is justified. Unfortunately, this assumption is rarely satisfied in practice and accordingly, the results obtained are of dou...

We present a new approach to the estimation of production functions that allows for richer patterns of firm heterogeneity than can be accommodated under the proxy variable methods of Olley and Pakes (1996) and Levinsohn and Petrin (2003). In particular, we show that the economics of the firms static input choice contains the necessary identifying information to control for the endogeneity probl...

To what measure does the CES (constant elasticity of substitution) property determine production functions? We show that it is not possible to find explicitly all two variable production functions f(x, y) having the CES property. This slightly generalizes the result of R. Sato [16]. We show that if a production function is a quasi-sum then the CES property determines only the functional forms o...

We consider a production function model that transforms worker inputs into outputs through peer effect networks. The distinguishing features of this production model are that the network is formal and observable through worker scheduling, and selection into the network is done by a manager. We discuss identification and suggest a variety of estimation techniques. In particular, we tackle endoge...