THE ROLE OF CURVATURE IN ESTIMATING ACCURATE DUAL FUNCTIONS

Loren W. Tauer

No 14752, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: 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.

Keywords: Research; Methods/Statistical; Methods (search for similar items in EconPapers)
Pages: 11
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:14752

DOI: 10.22004/ag.econ.14752

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