# A Production Function with Variable Elasticity of Factor Substitution

## TL;DR

This paper introduces a new, more general production function with variable elasticity of substitution, encompassing Cobb-Douglas and CES functions, supported by econometric evidence showing sigma below one.

## Contribution

It proposes a novel production function with variable elasticity of substitution, extending existing models and providing empirical validation.

## Key findings

- Elasticity of substitution is consistently below one.
- The new function generalizes Cobb-Douglas and CES models.
- Empirical estimates support the theoretical model.

## Abstract

The main aim of this paper is to prove the existence of a new production function with variable elasticity of factor substitution. This production function is a more general form which includes the Cobb-Douglas production function and the CES production function as particular cases. The econometric estimates presented in the paper confirm some other results and reinforces the conclusion that the sigma is well-below the Cobb-Douglas value of one.