COMMENT: TESTING FOR INVERSE HOMOTHETICITY: A NONPARAMETRIC APPROACH*

Laurent Cavaignac and Walter Briec

The Japanese Economic Review, 2007, vol. 58, issue 4, 524-531

Abstract: This paper starts from Fukuyama and Weber's (2004) work on testing for inverse homotheticity to show that the equality of the output gain function and the Zieschang output gain function is not equivalent to inverse homotheticity. Hence, testing for the equality of these gain functions cannot prove that a technology is inverse homothetic. Moreover, it is established that the gain functions are equal if and only if the direct and indirect isoquant and the corresponding efficient set are equal, which does not depend on inverse homotheticity.

Date: 2007
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