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Alecos Papadopoulos
Alecos Papadopoulos
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In the C.E.S. utility function do the paramatersparameters need to add up to unity to obtain the Cobb-Douglas utility function?

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BKay
BKay
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In the C.E.S. utility function do the paramaters need to add up to unitymunity to obtain the Cobb-Douglas utility function?

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Alecos Papadopoulos
Alecos Papadopoulos
  • 34k
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  • 118

In the C.E.S. utility function do the paramaters need to add up to unitym to obtain Cobb-Douglas?

Consider the C.E.S. utility function

$$U(x, y) = (ax^{-c} + by^{-c})^{-\frac{1}{c}} $$

Is it true that we must have $a+b=1$ in order to obtain a Cobb-Douglas utility function as $c\rightarrow 0$?