Estimating Multiproduct Costs when Some Outputs Are Not Produced
AbstractPooling diversified and specialized firm data to analyze multiproduct cost technologies raises two issues in applied research: (1) a functional form must be specified that accommodates zero outputs, and (2) assumptions must be made regarding the structure of the multiproduct technology when some outputs are not produced. This article introduces a methodology to estimate the translog multiproduct cost function in the presence of zero outputs. The method adds flexibility to allow for and test competing structural assumptions. The added flexibility can improve measurement of the global properties of multiproduct cost structures. An application to a cross section of U.S. railway firms demonstrates the key advantages.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10830.
Date of creation: 01 Nov 2003
Date of revision:
Publication status: Published in Empirical Economics, November 2003, vol. 28 no. 4, pp. 753-765
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Other versions of this item:
- Quinn Weninger, 2003. "Estimating multiproduct costs when some outputs are not produced," Empirical Economics, Springer, vol. 28(4), pages 753-765, November.
- NEP-AGR-2003-11-23 (Agricultural Economics)
- NEP-ALL-2003-10-28 (All new papers)
- NEP-EFF-2003-11-23 (Efficiency & Productivity)
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