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Estimation of Returns to Scale and the Elasticity of Substitution
G. S. Maddala
J. B. Kadane
Abstract
This paper concerns itself with the following problem: Suppose the true production function is of the CES type with constant returns to scalle. If we fit an unrestricted Cobb-Douglas production function instead, what is the nature of the bias in the estimate of the returns to scale parameter?
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