Why is the Cobb-Douglas production function so popular?

It is well known that, in continuous time, the Cobb-Douglas function can be derived from the underlying, data governing, accounting identity under some reasonable assumptions (factor shares are constant, and the weighted growth of the labour input price and the capital input price is constant). In t...

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Bibliographic Details
Published in:Evolutionary and institutional economics review 2024-04, Vol.21 (1), p.1-20
Main Author: Balk, Bert M.
Format: Article
Language:English
Subjects:
Capital stock
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
History of Economic Thought/Methodology
Political Economy/Economic Systems
Production functions
Productivity
Profits
Social Policy
Value added
Citations: Items that this one cites
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Summary:It is well known that, in continuous time, the Cobb-Douglas function can be derived from the underlying, data governing, accounting identity under some reasonable assumptions (factor shares are constant, and the weighted growth of the labour input price and the capital input price is constant). In this article these results are generalized in three ways: (1) the accounting identity contains a (pure) profit term; (2) continuous time is replaced by discrete time periods; (3) additional assumptions appear to be superfluous. The article also discusses extensions: from two to multiple inputs, from value added to gross output, and from a single production unit to an ensemble of those units.
ISSN:1349-4961
2188-2096
DOI:10.1007/s40844-024-00279-x