CES Production Function - A Review of Recent Literature

In economic theory measuring the elasticity of substitution, i.e., to what extent the various factors of production can be substituted for each other in the productive process has been a very important issue. Prior to 1961 applied production function studies dealt almost exclusively with functional forms which assumed specific numerical values for the elasticity of substitution parameter, (σ). The Cobb-Douglas function implies unitary elasticity, while the Leontief fixed coefficient model and "the straight line isoquant" production function indicate the values of σ zero and infinite respectively. Since the publication of the famous 1961 ACMS paper research in the field of C.E.S. production function - both of theoretical and empirical nature - is being continued.