The Probability Distribution Of The Average Marginal Products Of Cobb-Douglas Factors With Applications
The comparative productivity of inputs is often the focus of applied studies of production. For example, one might wish to compare the marginal product of water in irrigation districts to provide guidelines for capital investment in new water projects or to assist in water allocation decisions. The purpose of this note is to illustrate a straightforward econometric method for making such comparisons. It is assumed that panel data are available for T periods on N cross-sectional units and that output is produced according to a stochastic Cobb-Douglas production function. The Cobb-Douglas function was chosen because it has a simple formula for the marginal product and has been found to perform well in studies of agricultural production. The statistical results derived in the paper are obtained assuming that the error term of the production function is independently and identically distributed. This assumption can be easily relaxed and the asymptotic results presented in the paper can be generalised for the case where the variance-covariance matrix of the error term is known or can be estimated consistently. An important generalisation is the Zellner (1962) seemingly unrelated regressions framework. Only the simplest case is developed here because of space limitations. To illustrate the wide applicability of these results a test for risk aversion is developed which can be applied when the production setting satisfies specified assumptions.
Volume (Year): 32 (1988)
Issue (Month): 02-03 ()
|Contact details of provider:|| Postal: |
Phone: 0409 032 338
Web page: http://www.aares.info/
More information through EDIRC
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.:
- Batra, Raveendra N & Ullah, Aman, 1974. "Competitive Firm and the Theory of Input Demand under Price Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 537-48, May/June.
- Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
When requesting a correction, please mention this item's handle: RePEc:ags:ajaeau:22964. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.