The Role of Curvature in Estimating Accurate Dual Functions
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Author
Tauer, Loren W
Abstract
A production function highly concave in inputs will have a dual profit function less convex in prices. Even large variations in prices will cause little variation in input usage and output, resulting in poor profit function estimates. This is demonstrated using Monte Carlo simulation with various curvatures and error structures.
Description
WP 2001-02 May 2001
Date Issued
2001-05
Publisher
Charles H. Dyson School of Applied Economics and Management, Cornell University
Type
article