Abstract
The main purpose of this paper is to extend the nonparametric tests of regularity conditions on production functions and the related tests for the consistency of a data set with the hypothesis of productive efficiency or with the hypotheses of cost minimizing or profit maximizing behavior suggested by Afriat [1972] and Hanoch/’Rothschild [1972]. The tests suggested by these authors can be regarded as extensions of some tests due to Farrell [1957] and Farrell/Fieldhouse [1962]. Typically these tests involve the solution of a number of linear programming problems where the objective functions and the constraint functions are known functions of the given data; hence the title of the present paper.
The authors are indebted to C. Blackorby for helpful comments and to the Social Sciences and Humanities Research Council of Canada for financial support.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Afriat, S.N.: The Construction of Separable Utility Functions from Expenditure Data. Mimeographed, Purdue University, Lafayette 1967.
Afriat, S.N.: Efficiency Estimation of Production Functions. International Economic Review 13, 1972, 568–598.
Aigner, D., C.A.K. Lovell and P. Schmidt: Formulation and Estimation of Stochastic Frontier Production Function Models. Journal of Econometrics 6, 1977, 21–38.
Dantzig, G.B.: Linear Programming and Extensions. Princeton, N.J., 1963.
Debreu, G.: The Coefficient of Resource Utilization. Econometrica 19, 1951, 273–292.
Diewert, W.E.: Functional Forms for Profit and Transformation Functions. Journal of Economic Theory 6, 1973a, 284–316.
Diewert, W.E.: Afriat and Revealed Preference Theory. Review of Economic Studies 40, 1973b, 419–425.
Diewert, W.E.: Functional Forms Revenue and Factor Requirements Functions. International Economic Review 15, 1974, 119–130.
Diewert, W.E.: Exact and Superlative Index Numbers. Journal of Econometrics 4, 1976, 115–145.
Diewert, W.E.: Duality Approaches to Microeconomic Theory. Discussion Paper 78–09, University of British Columbia, Vancouver, March 1978.
Färe, R., and C.A.K. Lovell: Measuring the Technical Efficiency of Production. Journal of Economic Theory 19, 1978, 150–162.
Färe, R., C.A.K. Lovell and K. Zieschang: Measuring the Technical Efficiency of Multiple Output Production Technologies. Quantitative Studies on Production and Prices. Ed. by W. Eichhorn et al. Würzburg-Wien 1982 (this volume).
Farrell, M.J.: The Measurement of Productive Efficiency. Journal of the Royal Statistical Society, Series A 120, 1957, 251–281.
Farrell, M.J., and M. Fieldhouse: Estimating Efficient Production Functions under Increasing Returns to Scale. Journal of the Royal Statistical Society, Series A 125, 1962, 252–267.
Gorman, W.M.: Measuring the Quantities of Fixed Factors. In Value, Capital and Growth: Papers in honour of Sir John Hicks. Ed. by J.N. Wolfe. Chicago 1967.
Hanoch, G., and M. Rothschild: Testing the Assumptions of Production Theory: A Nonparametric Approach. Journal of Political Economy 80, 1972, 256, 275.
Jorgenson, D.W., and Z. Grilliches: The Explanation of Productivity Change. Review of Economic Studies 34, 1967, 240–283.
Konus, A.A.: The Problem of the True Index of the Cost of Living. Econometrica 7, 1939, 10–29.
Lau, L.J.: A Characterization of the Normalized Restricted Profit Function. Journal of Economic Theory 12, 1976, 131–163.
McFadden, D.: Cost, Revenue and Profit Functions: A Cursory Review. Working Paper No. 86, IBER, University of California, Berkeley 1966.
McFadden, D.: Cost, Revenue and Profit Functions. Production Economics: A Dual Approach to Theory and Applications, Vol. 1. Ed. by M. Fuss and D. McFadden. Amsterdam 1978, 3–109.
Rockafellar, R.T.: Convex Analysis. Princeton, N.J., 1970.
Samuelson, P.A.: Foundations of Economic Analysis. Cambridge, MA, 1947.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1983 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Diewert, W.E., Parkan, C. (1983). Linear Programming Tests of Regularity Conditions for Production Functions. In: Eichhorn, W., Henn, R., Neumann, K., Shephard, R.W. (eds) Quantitative Studies on Production and Prices. Physica, Heidelberg. https://doi.org/10.1007/978-3-662-41526-9_11
Download citation
DOI: https://doi.org/10.1007/978-3-662-41526-9_11
Publisher Name: Physica, Heidelberg
Print ISBN: 978-3-7908-0275-7
Online ISBN: 978-3-662-41526-9
eBook Packages: Springer Book Archive