A note on the two-input arc elasticity of substitution

  • Andrés Vázquez Spanish Council for Scientific Research
Keywords: arc elasticity, substitution elasticity
JEL Classification: D24, D33

Abstract

This note suggests a measure for the two-input arc elasticity of substitution that comes up naturally and preserves the salient characteristic of the Hicks-Robinson original concept. In particular, (i) it gives the average value of point substitution elasticities over the logarithmic arc of the input price ratio, and leads therefore to the exact estimation of the CES production function family, and (ii) its relationships with the discrete change in factor shares are formally parallel to those well known for the point elasticity assumption.

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Published
01-07-2008
How to Cite
VázquezA. (2008). A note on the two-input arc elasticity of substitution. Estudios Económicos, 23(2), 313-322. https://doi.org/10.24201/ee.v23i2.131
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