Abstract

Earlier work on aggregate production functions with capital-embodied technology showed that, when firms employ more than one type, conditions for partial (equipment) aggregation and for total aggregation differ. This paper studies simultaneously existing partial and total aggregates. Existence of a total and one partial aggregate implies existence of the complementary partial aggregate. However, simultaneous existence requires each firm's production function to be strongly separable in its subaggregates. The use of subaggregates like equipment and plant together with an aggregate capital thus implies that plant and equipment are perfect substitutes and is highly questionable.

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