Linearity of Aggregate Production Functions
Theoretical Economics
2023-09-28 v1
Abstract
We prove that when individual firms employ constant-returns-to-scale production functions, the aggregate production function defined by the maximum achievable total output given total inputs is always linear on some part of the domain. Our result provides a microfoundation for the linear production function.
Cite
@article{arxiv.2309.15760,
title = {Linearity of Aggregate Production Functions},
author = {Christopher P. Chambers and Alexis Akira Toda},
journal= {arXiv preprint arXiv:2309.15760},
year = {2023}
}