This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

A Simple Statistical Test of Violation of the Weak Axiom of Cost Minimization

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Subhash C. Ray (University of Connecticut, Storrs CT 06269-1063 USA.)

Additional information is available for the following registered author(s):

Abstract

A problem with a practical application of Varian's Weak Axiom of Cost Minimization is that an observed violation may be due to random variation in the output quantities produced by firms rather than due to inefficiency on the part of the firm. In this paper, unlike in Varian (1985), the output rather than the input quantities are treated as random and an alternative statistical test of the violation of WACM is proposed. We assume that there is no technical inefficiency and provide a test of the hypothesis that an observed violation of WACM is merely due to random variations in the output levels of the firms being compared. We suggest an intuitive approach for specifying a value of the variance of the noise term that is needed for the test. The paper includes an illustrative example utilizing a data set relating to a number of U.S. airlines.

Download Info
To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Publisher Info
Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.

Volume (Year): 39 (2004)
Issue (Month): 1 (January)
Pages: 111-121
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:dse:indecr:v:39:y:2004:i:1:p:111-121

Contact details of provider:
Postal: Delhi 110 007
Phone: 91-11-2766-6533/34/35, 2766-6703/04/05
Email:
Web page: http://www.econdse.org/
More information through EDIRC

Order Information:
Email:
Web: http://www.ierdse.org/

For technical questions regarding this item, or to correct its listing, contact: (Pami Dua).

Related research
Keywords: Non Parametric Analysis; Data Envelopment Analysis (DEA); Free Disposal Hull (FDH) Z-test;

Other versions of this item:

Find related papers by JEL classification:
D2 - Microeconomics - - Production and Organizations
C6 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Varian, Hal R, 1984. "The Nonparametric Approach to Production Analysis," Econometrica, Econometric Society, vol. 52(3), pages 579-97, May. [Downloadable!] (restricted)
  2. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October. [Downloadable!] (restricted)
  3. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter. [Downloadable!] (restricted)
  4. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? IDEAS indexes over 800000 items of research in Economics alone.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.