Day: August 5, 2026

Economists use production functions to express the mathematical relationship between physical inputs and the total quantity of output produced. A commonly used one is the Cobb-Douglas production function which has the form Y = AK ^αL^β, where Y is total output, A is total factor productivity (TFP), K is capital, and L is labor. Output elasticities with respect to capital and labor are constant and given by α and β, respectively.(See Note 1 for a bit of history.)

I learned a lot of stuff in grad school that I never got around to using but I still recall after all these years. I have been pondering production from another angle, another type of production function. I don’t have a functional form for it but it doesn’t really matter for my purposes here. The factors of production are technology, energy and material: Y = f(T, E, M).

In functional notation, it says that production is a function (unspecified) of technology, energy and matter. Each of those three factors are essential and to some extent they are substitutable. Technology can make energy and matter more productive, meaning you can produce more output with less energy and less matter. Continue reading “Energy and Production”