Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition

Pierre Ouellette and Stéphane Vigeant

Economics Bulletin, 2017, vol. 37, issue 3, 1549-1554

Abstract: oroughly studied and is well-known. A given set of assumptions on the technology implies a set of restrictions on the Jacobian of the cost function and on a subset of its Hessian matrix. The vector of second derivatives of the cost function with respect to the input prices and the output has not been fully characterized, however. In this note, we present a necessary and sufficient condition to ensure that the components of this vector are all strictly positive. That is, we specify the condition for all conditional demand functions to be simultaneously increasing in output. This condition is interpreted as a strengthening of the quasi-concavity of the production function

Keywords: Output effects; cost minimization; Hessian matrix; conditional input demands; cost function; duality. (search for similar items in EconPapers)
JEL-codes: D2 (search for similar items in EconPapers)
Date: 2017-07-08
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Working Paper: Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition (2017)
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