Arbeitspapier
The Elasticities of Complementarity and Substitution
This paper argues that the conventional definition of the elasticity of complementarity is not well suited to deal with the case of increasing returns. It proposes a slightly different formula, that uses a distance function formulation instead of a production function. The proposed definition coincides with the Hicksian measure in case the production function displays constant returns. It is more informative in case returns to scale are not constant, as it disentangles entry effects and substitution effects of factor supplies. The new definition is also preferable in that it is fully symmetric with the definition of the elasticity of substitution.
- Language
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Englisch
- Bibliographic citation
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Series: Tinbergen Institute Discussion Paper ; No. 04-101/1
- Classification
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Wirtschaft
Firm Behavior: Theory
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
- Subject
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distance function
elasticity of complementarity
returns to scale
tangency condition
Substitutionselastizität
Skalenertrag
Theorie
- Event
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Geistige Schöpfung
- (who)
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Broer, Peter
- Event
-
Veröffentlichung
- (who)
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Tinbergen Institute
- (where)
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Amsterdam and Rotterdam
- (when)
-
2004
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Broer, Peter
- Tinbergen Institute
Time of origin
- 2004
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