Duality Theory for Variable Costs in Joint Production
AbstractDuality methods for incomplete systems of consumer demand equations are adapted to the dual structure of variable cost functions in joint production. This allows the identification of necessary and sufficient restrictions on technology and cost so that the conditional factor demands can be written as functions of input prices, fixed inputs, and cost. These are observable when the variable inputs are chosen and committed to production, hence the identified restrictions allow ex ante conditional demands to be studied using observable data. This class of production technologies is consistent with all von Neumann-Morgenstern utility functions when ex post production is uncertain.
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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2009-02.
Length: 14 pages
Date of creation: Dec 2008
Date of revision:
Joint production; variable cost; duality theory;
Other versions of this item:
- Jeffrey T. LaFrance & Rulon D. Pope, 2010. "Duality Theory for Variable Costs in Joint Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 755-762.
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
- D2 - Microeconomics - - Production and Organizations
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-03-14 (Agricultural Economics)
- NEP-ALL-2009-03-14 (All new papers)
- NEP-EFF-2009-03-14 (Efficiency & Productivity)
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