Non-Convex Technologies and Cost Functions: Definitions, Duality and Nonparametric Tests of Convexity

Walter Briec, Kristiaan Kerstens and Philippe Vyen Eeckaut

No 2002/03, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: This contribution is the first systematic attempt to develop a series of nonparametric, deterministic technologies and cost functions without maintaining convexity. Specifically, we introduce returns to scale assumptions into an existing non-convex technology and, dual to these various technologies, define non-convex cost functions. These non-convex cost functions are never lower than their convex counterparts. Both non-convex technologies and cost functions (total, ray-average and marginal) are characterised by simple, closed form expressions. Furthermore, a local duality result is established between a local cost function and the input distance function. Finally, nonparametric goodness-of-fit tests for the convexity axiom are developed. This is a first step towards making convexity a statistically testable hypothesis.

Keywords: nonparametric technologies and cost functions; non-convexity; nonparametric test of convexity (search for similar items in EconPapers)
Pages: 40
Date: 2002
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Non-convex Technologies and Cost Functions: Definitions, Duality and Nonparametric Tests of Convexity (2006)
Journal Article: Non-convex Technologies and Cost Functions: Definitions, Duality and Nonparametric Tests of Convexity (2004)
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