CES Production Function

Discipline: Economics

CES production function, or constant elasticity of substitution production function, is a linearly homogenous production function with a constant elasticity of input substitution, which takes on forms other than unity.

CES production function replaced the Cobb-Douglas Production Function model which looked at physical output as a product of labor and capital inputs.

The equation for the model is:

Q = a[aK-b + (1 - a)L-b]-b

where Q is output, K is capital, L is labor and a and b are constants.

CES production function is proposed by the American economists Kenneth Arrow (1921- ), Hollis Chenery (1918-1994), Bagicha S. Minhas (1929-2005), and Robert Solow (1924- ).


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