Knowledge is not only an endogenous variable, but also an exogenous variable, which is the base to understand the char-acteristic of the returning law of hi-technology in knowledge-based economy.

To judge if the law of diminishing marginal returns is objective existence,the paper establishes a econometric panel data model with the data of 1238 Chinese listed company in 38 industry during 1998 to 2006.

The investment diminishing returns law is the core law of investment and return in the product production.

Analysis on Productivity and Returns to Scale of China s Service Industry;

Based on quality ladder model,together with the introduction of SZ model,this paper discusses the R&D efforts of enterprise and relevant goverment R&D policy under the assumption of diminishing returns to scale of firm s R&D,thus puts forward that we can realize the optimal distribution of R&D resources through providing leading firms with subsidies,while imposing taxes on later comers.

The new production function has follow properties:the production function has constant returns to scale;the marginal rate of technical substitution and the elasticity of substitution are only related to the ratio of the two elements;the production function satisfies the Euler Theorem.