Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71565
Authors: 
Bond, Stephen
Söderbom, Måns
Year of Publication: 
2005
Series/Report no.: 
IFS Working Papers, Institute for Fiscal Studies (IFS) 05/04
Abstract: 
Cobb Douglas production function parameters are not identified from cross-section variation when inputs are perfectly flexible and chosen optimally, and input prices are common to all firms. We consider the role of adjustment costs for inputs in identifying these parameters in this context. The presence of adjustment costs for all inputs allows production function parameters to be identified, even in the absence of variation in input prices. This source of identification appears to be quite fragile when adjustment costs are deterministic, but more useful in the case of stochastic adjustment costs. We illustrate these issues using simulated production data.
Subjects: 
Production functions
adjustment costs
identification
JEL: 
D20
D24
C23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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