Reference : A Note on the Characterization of the Neoclassical Production Function
Scientific journals : Article
Business & economic sciences : General economics & history of economic thought
A Note on the Characterization of the Neoclassical Production Function
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Macroeconomic Dynamics
Cambridge University Press
Yes (verified by ORBilu)
[en] neoclassical growth model ; capital accumulation ; stagnation ; Inada conditions
[en] We study production functions with capital and labor as arguments that exhibit positive, yet diminishing marginal products and constant returns to scale. We show that such functions satisfy the Inada conditions if (i) both inputs are essential and (ii) an unbounded quantity of either input leads to unbounded output. This allows for an alternative characterization of the neoclassical production function that altogether dispenses with the Inada conditions. Although this proposition generalizes to the case of n > 2 factors of production, its converse does not hold: 2n Inada conditions do not imply that each factor is essential.
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