Linearity of Aggregate Production Functions

2023/09/27 by Chambers, Christopher P., Toda, Alexis Akira
#FOS: Economics and business #Theoretical Economics (econ.TH)

paper · doi:10.48550/arxiv.2309.15760

Abstract

We prove that when individual firms employ constant-returns-to-scale production functions, the aggregate production function defined by the maximum achievable total output given total inputs is always linear on some part of the domain. Our result provides a microfoundation for the linear production function.

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