Comment on “C.E.S. production functions in the light of the Cambridge critique”

The controversy revived in Bertram Schefold’s paper is based on three common assumptions: (1) the underlying techniques are linear (2) perfect competition obtains (3) the economy operates in a putty-putty context. The consequences of dropping these assumptions are discussed, and the relation between nonlinearity and the error due to the use of an “imprecise” production function is examined.