Inada conditions asymptotically transform production function into the Cobb-Douglas

ÖZKAYA A.

ECONOMICS LETTERS, vol.201, 2021 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 201
  • Publication Date: 2021
  • Doi Number: 10.1016/j.econlet.2021.109786
  • Journal Name: ECONOMICS LETTERS
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Periodicals Index Online, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Public Affairs Index, zbMATH
  • Galatasaray University Affiliated: Yes

Abstract

This paper demonstrates that the result proposed in Barelli and Pessoa (2003) yields contradictions, making their main conclusion unproven and inconsistent. First, we correct the error of the authors. Second, we prove that imposing the Inada conditions on a production function inevitably transforms that function into the Cobb-Douglas production function whose parameters are endogenously determined by the original production function. Accordingly, we demonstrate that our results invalidate the interpretation of Litina and Palivos (2008), and we correct the erroneous conclusion of Litina and Palivos (2008). (c) 2021 Elsevier B.V. All rights reserved.