Economies of Scale, Technical Progress, and the Nonhomothetic Leontief Production Function: An Application to the Japanese Petrochemical Processing Industry.
A system of derived input demand functions with the property of zero elasticity of substitution between any pair of inputs is investigated. It is shown that such a system can be derived from cost minimization subject to a production function constraint. The underlying production function is explici...
| Publicado en: | Journal of Political Economy Vol. 80; no. 6; pp. 1167 - 1188 |
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| Autores principales: | , |
| Formato: | Artículo |
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University of Chicago Press
Nov/Dec72
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=hlh&AN=5052375&site=ehost-live header: @attributes: shortDbName: hlh uiTerm: 5052375 longDbName: Humanities International Complete uiTag: AN controlInfo: bkinfo: jinfo: jid: 00223808 JPE jtl: Journal of Political Economy issn: 00223808 maglogo: N pubinfo: dt: Nov/Dec72 vid: 80 iid: 6 pid: 415 pub: University of Chicago Press artinfo: ui: 5052375 10.1086/259963 ppf: 1167 ppct: 21 formats: tig: atl: Economies of Scale, Technical Progress, and the Nonhomothetic Leontief Production Function: An Application to the Japanese Petrochemical Processing Industry. aug: au: Lau, Lawrence J. Tamura, Shuji su: Demand function Production functions (Economic theory) Petroleum industry Japan sug: subj: Japan Demand function Production functions (Economic theory) Petroleum industry ab: A system of derived input demand functions with the property of zero elasticity of substitution between any pair of inputs is investigated. It is shown that such a system can be derived from cost minimization subject to a production function constraint. The underlying production function is explicitly derived and is named the "nonhomothedc Leontief production function," it being the most general production function with zero elasticities of substitution between all pairs of inputs. This production function allows differential returns to scale to inputs. It is applied to a sample of Japanese petrochemical plants. The results indicate that homotheticity must be rejected; that there are substantial though different economies of scale with respect t.o capital and labor, but that energy and raw materials are used in constant proportions to output, even over time; that technical progress, to the extent that it is present, is embodied in scale. In this study we are interested in analyzing the structure of production of the Japanese petrochemical processing industry, which is believed to be characterized by ex ante limited substitutability between inputs for a given level of output but also at the same time by substantial economies of scale, possibly to different degrees for different inputs. Maintaining the hypothesis of zero elasticities of substitution,[11] we conclude that, on the bases of the F-tests; homotheticity of the production function must be rejected for the Japanese petrochemical processing industry. Hence it 'will be inappropriate to analyze this industry using a conventional homothetic or a homogeneous production functions. [12] Sincehomotheticity is rejected, constant returns is also automatically rejected. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: Y dt: @attributes: year: 1972 holdings: @attributes: islocal: N |
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