Specification and Estimation of Cobb-Douglas Production Function Models
In this paper we consider the specification and estimation of the Cobb-Douglas production function model. After reviewing the "traditional " specifying assumptions for the model which are based on deterministic profit maximization, we develop a model in which profits are stochastic and in which maximization of the mathematical expectation of profits is posited. "Sampling theory " and Bayesian estimation techniques for this model are presented. 1.