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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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