Nonconvexity in Production and Cost Functions: An Exploratory and Selective Review

Walter Briec, Kristiaan Kerstens and Ignace van de Woestyne
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Walter Briec: LAMPS - LAboratoire de Modélisation Pluridisciplinaire et Simulations - UPVD - Université de Perpignan Via Domitia

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Abstract: The purpose of this contribution is to provide an overview of developments in nonconvex production technologies and economic value functions, with special attention to the cost function. Apart from a somewhat selective review of theoretical issues, the emphasis is on whether the assumption of convexity makes a difference in practice. Anticipating our conclusion, we argue that traditional convex empirical results differ on average rather markedly from alternative nonconvex ones. This should make the discipline reconsider its traditional relationship with convexity in both theoretical and applied production analysis.

Keywords: Nonparametric frontier; Convexity; Production; Cost function; Scale; Productivit (search for similar items in EconPapers)
Date: 2020-10-23
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Published in Subhash C. Ray (éd.); Robert Chambers (éd.); Subal Kumbhakar (éd.). Handbook of Production Economics, 1, Springer Singapore, pp.1-34, 2020, 978-981-10-3450-3. ⟨10.1007/978-981-10-3450-3_15-1⟩

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Related works:
Chapter: Nonconvexity in Production and Cost Functions: An Exploratory and Selective Review* (2022)
Working Paper: Nonconvexity in Production and Cost Functions: An Exploratory and Selective Review* (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03048805

DOI: 10.1007/978-981-10-3450-3_15-1

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