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Elasticities of substitution and complementarity

Research paper by David I. Stern

Indexed on: 31 Dec '10Published on: 31 Dec '10Published in: Journal of Productivity Analysis



Abstract

This paper develops a classification scheme of the many different definitions of elasticities of substitution and complementarity in the production case based on primal and dual representations of technology and their related direct and inverse demand functions, gross and net substitution, elasticity type, and three different basic concepts of substitution and complementarity. The ten elasticities of substitution are derived from the cost, profit, input distance, and revenue functions. All the elasticities are equally valid for single and multi-output technologies. The classic Berndt-Wood dataset is used to show the considerable variation across the elasticities.