THE ROLE OF CURVATURE IN ESTIMATING ACCURATE DUAL FUNCTIONS

A production function highly concave in inputs will have a dual profit function less convex in prices. Even large variations in prices will cause little variation in input usage and output, resulting in poor profit function estimates. This is demonstrated using Monte Carlo simulation with various curvatures and error structures.


Issue Date:
2001
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/14752
Total Pages:
11
Series Statement:
Working Paper (WP 2001-02)




 Record created 2017-04-01, last modified 2017-11-19

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