Article1968

The Constant Elasticity of Transformation Production Frontier and Linear Supply System

181 citations0/0 files storedInternational Economic Review

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Efficiency Analysis Using DEA Agricultural economics and policies Economic Growth and Productivity

Abstract

IN THIS PAPER we define the elasticity of transformation analogously with the elasticity of substitution. We derive the family of CET (constant elasticity of transformation) production possibility schedules which (not surprisingly) turn out to be algebraically identical with CES isoquants, apart from a difference of sign determining their concavity.2 We show that a given, constant, elasticity of transformation is compatible with product-neutral and product-biased shifts in the location of the frontier, pointing out that CET model therefore is of potential value in the analysis of technical change.3 Finally, we suggest a possible application of the CET model in the empirical analysis of supply, quoting by way of illustration the results of an empirical three-sector agricultural supply model fitted to post war Australian data.

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References

1961Capital-Labor Substitution and Economic Efficiency 1962Production Functions with Constant Elasticities of Substitution

Cited by

2016Introduction to Computable General Equilibrium Models 2011Introduction to Computable General Equilibrium Models 2002Multiple-Output Production With Undesirable Outputs 1984Joint determination of food consumption and production in rural Sierra Leone 1996Chapter 1 Computable general equilibrium modelling for policy analysis and forecasting 1996Efficiency measurement with multiple outputs and multiple inputs 2000A Bayesian analysis of multiple-output production frontiers 1990Welfare Costs of U.S. Quotas in Textiles, Steel and Autos

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