On the Estimation of Factor Substitution in the Translog Model
The Review of Economics and Statistics
1987
The conventional approach to computation of the Allen partial elasticities of substitution (AES) in the framewo rk of the translog production function requires to estimate a set of multivariate input-demand functions. This paper proposes an alternati ve way to compute the AESs, requiring only to estimate elasticities v ia a truncated, single cost-share equation. Value-added separability and pairwise factor substitutabilities have both been validated under the nonlinear restriction. The achievements of the alternative appro ach are by and large consistent with those of the conventional approa ch and with those in some of the existing studies. Copyright 1987 by MIT Press.
- DOI
- 10.2307/1925528
- Volume
- 69 (3)
- Pages
- 409
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