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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/25787
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| Title: | | The elasticity of derived demand, factor substitution and product demand: corrections to Hicks' formula and Marshall's four rules  |
| Authors: | | Chirinko, Robert S. Mallick, Debdulal |
| Issue Date: | | 2006 |
| Series/Report no.: | | CESifo working paper 1742 |
| Abstract: | | Nearly 75 years ago, John Hicks introduced and formalized the concept of the elasticity of substitution between capital and labour and its relation to derived demand. The resulting formula has proven very useful in understanding the derived demand for productive factors, the distribution of factor incomes, and Marshall's Four Rules. This short paper notes that a slip occurred in the original derivation, presents a modified formula, and shows that Marshall's First Rule is no longer generally valid. |
| JEL: | | D21 D33 J23 A2 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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