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A Monte Carlo Study of Alternative Estimates of the Cobb-Douglas Production Function

J. Kmenta
M. E. Joseph

Abstract

A Monte Carlo experiment is carried out to examine the small sample properties of ordinary least squares, indirect least squares, Hoch's, and Klein's estimates of the parameters of the Cobb-Douglas production function. A perfectly competitive model of firms in a single industry is considered in nine situations which differ in the behavior of the disturbances, the variability of inputs, and the position of the average firm. In each case 200 samples of size 20 and 200 samples of size 100 were obtained to approximate the sampling distribution of the various estimators.