On quasi-homogeneous production functions with constant elasticity of factors substitution

  • Guennadi A. Khatskevich School of Business and Management of Technology of Belarusian State University, Revaljucyjnaja Street, 11, 220007, Minsk, Belarus
  • Andrei F. Pranevich Yanka Kupala State University of Grodno, Elizy Ažeška Street, 22, 230023, Grodno, Belarus

Abstract

The study of the shape and properties of production functions is a subject of great interest in economic analysis. The class of production functions with constant Hicks elasticity of substitution includes many important production functions in economics; in particular, Cobb – Douglas production function and CES production function. In 2010, L. Losonczi proved that a two-factor homogeneous production function satisfies the constant Hicks elasticity of substitution property if and only if this homogeneous function is either a Cobb – Douglas production function or a CES production function. The similar result for multi-factor homogeneous production functions was proved by B.-Y. Chen in 2012. In this paper we generalize results of L. Losonczi and B.-Y. Chen to the class of quasi-homogeneous two-factor production functions with constant Hicks elasticity of substitution. Namely the notion of quasi-homogeneous two-factor production functions is introduced, relation between the condition of homogeneity and the condition of quasi-homogeneity is established, and the class of quasi-homogeneous two-factor production functions with constant elasticity of factors substitution by Hicks is obtained. Moreover, we pointed out the analytical form for quasi-homogeneous two-factor production functions with unit elasticity of substitution. The obtained results can be applied in modeling of production processes.

Author Biographies

Guennadi A. Khatskevich, School of Business and Management of Technology of Belarusian State University, Revaljucyjnaja Street, 11, 220007, Minsk, Belarus

doctor of science (economics), full pro- fessor; dean of the faculty of business

Andrei F. Pranevich, Yanka Kupala State University of Grodno, Elizy Ažeška Street, 22, 230023, Grodno, Belarus

PhD (mathematics and physics), docent; associate professor at the department of mathematic and software support for economic systems

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Published
2018-10-26
Keywords: quasi-homogeneous production function, constant elasticity of substitution
How to Cite
Khatskevich, G. A., & Pranevich, A. F. (2018). On quasi-homogeneous production functions with constant elasticity of factors substitution. Journal of the Belarusian State University. Economics, 1, 46-50. Retrieved from https://journals.bsu.by/index.php/economy/article/view/2179
Issue
No 1 (2017): Journal of the Belarusian State University. Economics
Section
C. Mathematical and Quantitative Methods

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