Econometrica: May 1970, Volume 38, Issue 3

A Microeconomic Production Function

https://doi.org/0012-9682(197005)38:3<559:AMPF>2.0.CO;2-E
p. 559-573

David Levhari, Eytan Sheshinski

Machines produce a constant flow of output when operating, and break down in a random process. The task of workers is to repair the broken machines. Servicing time is also a random process [2]. The limiting steady state probabilities and the relation between output and inputs are derived, and fitted to a Cobb-Douglas production function.

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