Verifying Curvature of Profit and Cost/Expenditure Functions

David Mandy ()

No 1705, Working Papers from Department of Economics, University of Missouri

Abstract: Convexity or concavity of optimal value functions is sometimes checked by evaluating leading principal minors of the Hessian matrix. This practice is not justified by extant theorems about semidefinite matrices. A theorem is presented that justifies the practice and provides a relatively easy method of proving the relationship between semidefiniteness and principal minors.

Keywords: Profit/Cost/Expenditure Function; Semidefinite Hessian; Principal Minors (search for similar items in EconPapers)
JEL-codes: C02 (search for similar items in EconPapers)
Pages: 5 pgs.
Date: 2017
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Citations: View citations in EconPapers (1)

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Working Paper: Verifying Curvature of Profit and Cost/Expenditure Functions (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:1705

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