Xycoon logo
Supply Models
Home    Site Map    Site Search    Xycoon College    Free Online Software    
horizontal divider
vertical whitespace

Other supply specifications

[Home] [Up] [Differential Supply] [Other models]


IV.II.2 Other supply specifications

In econometric practice many specifications are used. Here some frequently used models are shortly described as illustrations.

A simple production function may be formulated by the Cobb-Douglas specification

Other supply specifications

(IV.II.2-1)

where Y denotes output, K is capital, and L is labor. Eq. (IV.II.2-1) can be written in log-linear form as

(IV.II.2-2)

(IV.II.2-3)

This specification can be related to input demand systems by the use elasticities of substitution between input factors defined as

(IV.II.2-4)

(IV.II.2-5)

From this result it also possible to deduce some simple factor demand equations

(IV.II.2-6)

and

(IV.II.2-7)

Now consider the generalized Leontief cost function which states formally that

(IV.II.2-8)

(IV.II.2-9)

(IV.II.2-10)

where dii is obviously a constant term in the equations.

The general Hicks-Allen partial elasticity of substitution is defined by

(IV.II.2-11)

where C is a cost function.

Now (IV.II.2-11) can be applied to the generalized Leontief model which can be shown to yield

(IV.II.2-12)

and

(IV.II.2-13)

Even cross-price elasticities can be obtained for the generalized Leontief cost function by

(IV.II.2-14)

and

(IV.II.2-15)

where

(IV.II.2-16)

A general form of production functions which are nonhomothetic, is defined by the nonhomothetic translog cost function

(IV.II.2-17)

(IV.II.2-18)

which are the so-called homogeneity conditions.

The nonhomothetic translog model can be transformed into a homothetic translog equation if the following restrictions are imposed

(IV.II.2-19)

vertical whitespace




Home
Up
Differential Supply
Other models
horizontal divider
No news at the moment...
horizontal divider

© 2000-2012 All rights reserved. All Photographs (jpg files) are the property of Corel Corporation, Microsoft and their licensors. We acquired a non-transferable license to use these pictures in this website.
The free use of the scientific content in this website is granted for non commercial use only. In any case, the source (url) should always be clearly displayed. Under no circumstances are you allowed to reproduce, copy or redistribute the design, layout, or any content of this website (for commercial use) including any materials contained herein without the express written permission.

Information provided on this web site is provided "AS IS" without warranty of any kind, either express or implied, including, without limitation, warranties of merchantability, fitness for a particular purpose, and noninfringement. We use reasonable efforts to include accurate and timely information and periodically updates the information without notice. However, we make no warranties or representations as to the accuracy or completeness of such information, and it assumes no liability or responsibility for errors or omissions in the content of this web site. Your use of this web site is AT YOUR OWN RISK. Under no circumstances and under no legal theory shall we be liable to you or any other person for any direct, indirect, special, incidental, exemplary, or consequential damages arising from your access to, or use of, this web site.

Contributions and Scientific Research: Prof. Dr. E. Borghers, Prof. Dr. P. Wessa
Please, cite this website when used in publications: Xycoon (or Authors), Statistics - Econometrics - Forecasting (Title), Office for Research Development and Education (Publisher), http://www.xycoon.com/ (URL), (access or printout date).

Comments, Feedback, Bugs, Errors | Privacy Policy Web Awards