CES production function

CES production function stands for constant elasticity of substitution production function.This function is extensively used in applied economic research.The parametric structure of this function is-

1) Y=A[t(ak K)^g+(1-t)(an N)^g]^1/g

Here '0<t<1' is a share parameter and 'g' determines the degree of substitutability of the inputs.The parameters A, ak, an depend upon the units in which input and output are measured and play no important role. The value of g is less than or equal to 1 and can be -ve infinity.

In case of perfect substitution g=1, in case of no substitution g=- infinity,in case of unit elasticity of substitution g=0.