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Duality in Production

Walter Diewert () working papers from Vancouver School of Economics

Abstract: The paper reviews the application of duality theory in production theory. Duality theory turns out to be a useful tool for two reasons: (i) it leads to relatively easy characterizations of the properties of systems of producer derived demand functions for inputs and producer supply functions for outputs and (ii) it facilitates the generation of flexible functional forms for producer demand and supply functions that can be estimated using econometrics. The paper focuses on describing the properties of five functional forms that have been used in the production literature: (i) the Constant Elasticity of Substitution (CES), (ii) the Generalized Leontief, (iii) the translog, (iv) the Normalized Quadratic and (v) the Konüs Byushgens Fisher functional forms. The applications of GDP functions and joint cost functions to various areas of applied economics is explained.

Keywords: Production theory; duality theory; cost functions; production functions; joint cost functions; national product functions; GDP functions (search for similar items in EconPapers)
JEL-codes: C02 C32 C43 D24 D42 D92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff
Date: 2018-02-06, Revised 2018-02-06
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