<p>In <a href="https://economics.stackexchange.com/a/399/61">this answer</a> you can see that <span class="math-container">$\delta$</span> becomes the exponent in the Cobb-Douglas function as <span class="math-container">$\rho \to 0$</span>, i.e. as the elasticity of substitution becomes unity.<br>
The exponent in the Cobb-Douglas production function is the output elasticity of the input(s), but also, it is the "output share" of each factor, under competitive conditions. This is why the scholars that introduced the C.E.S. function named this parameter "distribution parameter".<br>
So you can start thinking from there.  </p>

CC BY-SA 4.0
2019-01-20T20:55:07.613Z
2019-01-20T20:55:07.613Z
Alecos Papadopoulos
<p>This is the production function (two input factors: <span class="math-container">$x_1$</span> and <span class="math-container">$x_2$</span>)</p>

<p><span class="math-container">$$q=A[δx_1^ρ+(1-δ)x_2^ρ]^{\frac{1}{ρ}} $$</span></p>

<p>If distribution factor <span class="math-container">$δ$</span> is set to increase, what are the economic impacts on these two input factors? Substitution elasticity remains unchanged.</p>

<production-function>
What is the economic meaning of distribution parameter in a CES-production function?
Wenwen Zhang
# What is the economic meaning of distribution parameter in a CES-production function?

(Asked by: username_0 on 2019-01-18)

This is the production function (two input factors: $x\_1$ and $x\_2$)

$$q=A[δx\_1^ρ+(1-δ)x\_2^ρ]^{\frac{1}{ρ}} $$

If distribution factor $δ$ is set to increase, what are the economic impacts on these two input factors? Substitution elasticity remains unchanged.

**Tags:** production-function

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## 1 answers

### Answer by username_1 on 2019-01-20. Score: 1

In [this answer](https://economics.stackexchange.com/a/399/61) you can see that $\delta$ becomes the exponent in the Cobb-Douglas function as $\rho \to 0$, i.e. as the elasticity of substitution becomes unity.  
The exponent in the Cobb-Douglas production function is the output elasticity of the input(s), but also, it is the "output share" of each factor, under competitive conditions. This is why the scholars that introduced the C.E.S. function named this parameter "distribution parameter".  
So you can start thinking from there.


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