This paper provides a theoretically consistent approach to estimating demand relationships in which kink points occur either in the interior or on the vertices of the budget set. There are important classes of problems in developing countries which demonstrate such kinked budget sets including binding non-negativity constraints. This paper also extends these methods to the estimation of production structures. As an application a translog cost function for three energy inputs is estimated from cross-sections of individual Indonesian firms.
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Paper provided by University of Minnesota, Economic Development Center in its series Bulletins with number
7470.
Cited by: (explanations, 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.)
Dubin, Jeffrey A. & Wilde, Louis L., 1991.
"Welfare Economics for Tobit Models,"
Working Papers
753, California Institute of Technology, Division of the Humanities and Social Sciences.
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