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CES production function
(1961)
CES production function, or constant elasticity of substitution production function, is a linearly homogenous production function with a constant elasticity of input substitution, which takes on forms other than unity.
CES production function replaced the Cobb-Douglas Production Function model which looked at physical output as a product of labor and capital inputs.
The equation for the model is:
Q = a[aK-b + (1 - a)L-b]-b
where Q is output, K is capital, L is labor and a and b are constants.
CES production function is proposed by the American economist Kenneth Arrow (1921- ), Hollis Chenery (1918- ), BAGICHA S. MINHAS, and Robert Solow (1924- ).
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