
UNDERSTANDING COBB-DOUGLAS PRODUCTION FUNCTION IN AGRICULTURAL
ECONOMICS
Author:
Sristy Gautam
This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited
Cobb- Douglas production function shows the relationship between physical capital, labor inputs and the output produced. It is based on an empirical study of the American manufacturing industry conducted by Paul H. Douglas and C. W in 1928. The various modification and derivation of this production function is used in various analysis. It is a useful tool to agricultural economists. It can be used in estimation of production relationships, analyzing returns to scale, impact of technological change, policy analysis, sustainability, environmental impact and farm size efficiency analysis. It is popular because its form is relatively easy to use and is simple to parameterize through the use of regression analysis and correlation. It makes simple to determine the indicators of productivity and return on assets, the output elasticity for all parameters, and the marginal rates of substitution by the use of this function. Further improvements and several modifications to this model will probably increase its relevance and applicability in facing the future issues in agricultural economics as the farming practices and technologies continue to change.
Pages | 56-59 |
Year | 2024 |
Issue | 2 |
Volume | 4 |