Nonhomogeneous Production Functions and Applications to Telecommunications
Volume: Volume 3, No. 2
Issue: Autumn 1972
Pages: pp. 531-543
Authors: H.D. Vinod
Title: Nonhomogeneous Production Functions and Applications to Telecommunications
Abstract: A form of nonhomogeneous production function is utilized to compute marginal productivities, various elasticities, optimum input ratios, and the like, for different levels of inputs and outputs. Such comparisons are relevant for labor negotiations, capital investment, and control by either a parent corporation or a government regulatory agency. This form of production function can be fitted by simple regression and allows variable returns to scale and variable elasticities of substitution.
The author illustrates applications of the function with two preliminary studies of Bell System data. The first study includes estimation of certain cost elasticities for the manufacture of sealed contacts by the Western Electric Co. The second deals with an aggregative production function for the Bell System, where it is found that the empirical evidence does not support the assertion that the Bell System is over-capitalized.