In macroeconomics, the Inada conditions, named after Japanese economist Ken-Ichi Inada, are assumptions about the shape of a production function that guarantee the stability of an economic growth path in a neoclassical growth model. The conditions as such had been introduced by Hirofumi Uzawa.
The six conditions for a given function are:
- the value of the function at 0 is 0:
- the function is continuously differentiable,
- the function is strictly increasing in : ,
- the second derivative of the function is negative in (thus the function is concave): ,
- the limit of the first derivative is positive infinity as approaches 0: ,
- the limit of the first derivative is zero as approaches positive infinity:
All these conditions are met by a Cobb–Douglas production function.
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