Elasticity of Substitution Measure
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- See: Elasticity (Economics), Curvature, Constant Elasticity of Substitution.
- (Wikipedia, 2016) ⇒ http://en.wikipedia.org/wiki/elasticity_of_substitution Retrieved:2016-1-5.
- Elasticity of substitution is the elasticity of the ratio of two inputs to a production (or utility) function with respect to the ratio of their marginal products (or utilities). It measures the curvature of an isoquant and thus, the substitutability between inputs (or goods), i.e. how easy it is to substitute one input (or good) for the other. In the modern period, John Hicks is considered to have formally introduced this concept in 1932, however he had, by his own admission, introduced the inverse of the elasticity of substitution, or the elasticity of complementarity. The credit then, also by Hicks' own admission, should go to Joan Robinson.
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- Technically speaking, curvature and elasticity are unrelated, but isoquants with different elasticities take on different shapes that might appear to differ in a general sense of curvature (see )
- (Palivos & Karagiannis, 2010) ⇒ Theodore Palivos, and Giannis Karagiannis. (2010). “The Elasticity of Substitution As An Engine of Growth." Macroeconomic Dynamics 14, no. 05
- (Blackorby & Russell, 1989) ⇒ Charles Blackorby, and R. Robert Russell. (1989). “Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen / Uzawa and Morishima Elasticities)." The American Economic Review