Empirical properties of duality theory
This research examines selected empirical properties of duality relationships. Monte Carlo experiments indicate that Hessian matrices estimated from the normalised unrestricted profit, restricted profit and production functions yield conflicting results in the presence of measurement error and low relative price variability. In particular, small amounts of measurement error in quantity variables can translate into large errors in uncompensated estimates calculated via restricted and unrestricted profit and production functions. These results emphasise the need for high quality data when estimating empirical models in order to accurately determine dual relationships implied by economic theory.
Volume (Year): 46 (2002)
Issue (Month): 1 (March)
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"The Use Of Cross-Sectional Estimates Of Profit Functions For Tests Of Relative Efficiency: A Critical Review,"
Australian Journal of Agricultural Economics,
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"Cost Functions and Duality for Stochastic Technologies,"
197844, University of Maryland, Department of Agricultural and Resource Economics.
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