A Nonparametric Approach to Expenditure-Constrained Profit Maximization

Rolf Färe, Shawna Grosskopf and Hyunok Lee

American Journal of Agricultural Economics, 1990, vol. 72, issue 3, 574-581

Abstract: A nonparametric approach to expenditure-constrained profit maximization is developed. A deterministic frontier profit function is constructed with and without expenditure constraints. Foregone profit is used as dual evidence for the existence of expenditure constraints. Individual evaluations on performance and expenditure constraints are produced. Empirical analysis is based on survey data for California rice farms. Seventeen of the eighty-two surveyed farms experience profit loss as a result of expenditure constraints.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:72:y:1990:i:3:p:574-581.

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