Transcendental Production Function (Agro Economics)

■ Transcendental P.F

Generally, the CDPF didn't properly represent the neo classical three stages production function.

The problem of greatest concern at that time was the fixed production elasticities, which require that APP (Average Physical Productivity) and MPP (Marginal Physical Productivity) be at a fixed proportion to each other.

This issue was not unrelated to the fact that the CDPF could represent only one stage of prduction at a time, very much unlike the neo classical presentation.

Halter, Calter and Hocking were concerned with the lack of compatibility between the CDPF and the neo classical three stages P.F (Production Function).

Researchers ought to make modifications in CDPF to allow for three stages of production and variable production elasticities, yet the same time retain a function that was clearly related to the CDPF and was easy to estimate from agricultural data.

The function that Halter et al. introduced in 1957 looked like a slightly modified version of the CDPF.

The base of the natural logarithm, "e" was added and raised to a power that was a function of the amount of input that was used.

The two input function was said was: 

Y = [{Ax1^alpha1} × {x2^alpha2} × {e^(y1*x1+y2*x2)]

Thank you

Aditya Pokhrel

MBA, MA Economics, MPA