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Constant elasticity of transformation

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Constant Elasticity of Transformation (CET) is firstly brought forward by Powell and Gruen (1968)[1], which is a new form of production possibility frontier.

It turned out that CET frontier was algebraically identical with CES (Constant elasticity of substitution) isoquant, apart from different sign determining their concavity (Arrow,Chenery,Minhas,and Solow,1961[2]).

Given two products,x1 and x2,which are produced by the same resources combined in different proportions.


References

  1. ^ Powell and Gruen (1968)
  2. ^ Arrow,Chenery,Minhas,and Solow,1961
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