Why Are Concavity Conditions Not Satisfied in the Cost Function? The Case of Japanese Manufacturing Firms during the Bubble Period
This paper examines empirically some of the reasons why Japanese manufacturing firms frequently fail to satisfy concavity conditions of the cost function. We focus on the "bubble period" in the 1980s when land was in great demand for reasons related to both production and speculation, and land prices soared. By estimating the translog cost function with land as one of production inputs for manufacturing firms, we find that violation of concavity resulted from borrowing constraints and large adjustments of employment. We also demonstrate that elasticities of substitution between land and other inputs and input demand with respect to land rental prices are both estimated with large biases if the firms violating concavity are not excluded from the analysis.
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 73 (2011)
Issue (Month): 4 (08)
|Contact details of provider:|| Postal: Manor Rd. Building, Oxford, OX1 3UQ|
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0305-9049
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0305-9049|
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.:
- Ogawa, Kazuo & Kitasaka, Shin-ichi & Yamaoka, Hiroshi & Iwata, Yasuharu, 1996. "Borrowing Constraints and the Role of Land Asset in Japanese Corporate Investment Decision," Journal of the Japanese and International Economies, Elsevier, vol. 10(2), pages 122-149, June.
- Ogawa, Kazuo & Suzuki, Kazuyuki, 1998.
"Land Value and Corporate Investment: Evidence from Japanese Panel Data,"
Journal of the Japanese and International Economies,
Elsevier, vol. 12(3), pages 232-249, September.
- Ogawa, K. & Suzuki, K., 1995. "Land Value and Corporate Investment: Evidence from Japanese Panel Data," ISER Discussion Paper 0373, Institute of Social and Economic Research, Osaka University.
- Ogawa, K. & Suzuki, K., 1996. "Land Value and Corporate Investment: Evidence from Japanese Panel Data," ISER Discussion Paper 0408, Institute of Social and Economic Research, Osaka University.
- Ryan, David L. & Wales, Terence J., 2000. "Imposing local concavity in the translog and generalized Leontief cost functions," Economics Letters, Elsevier, vol. 67(3), pages 253-260, June.
- Ogawa, K. & Suzuki K., 1996. "Demand for Bank Loans Under Borrowing Constraints: A Panel Study of Japanese Firm Data," ISER Discussion Paper 0409, Institute of Social and Economic Research, Osaka University.
- Chew Chua & Hsein Kew & Jongsay Yong, 2005. "Airline Code-share Alliances and Costs: Imposing Concavity on Translog Cost Function Estimation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 26(4), pages 461-487, 06.
- Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
When requesting a correction, please mention this item's handle: RePEc:bla:obuest:v:73:y:2011:i:4:p:556-580. 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
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.