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The Structure of Technology with Endogenous Capital Utilization

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  • Kim, Moshe

Abstract

A model is presented for the estimation of production technology when capital is endogenously utiliz ed. The present model permits the firm to choose the rate of utilizat ion and level of maintenance applied to its capital equipment such th at the user cost of capital services is minimized. The model is one o f two-stage optimization and estimation. The two stages are integrate d, using duality theory, through the generation of an instrumental us er cost variable in the first stage. The instrumental user cost is th en utilized for the estimation of the aggregate technology. The resul ts are compared to results obtained from standard models with exogeno us capital utilization and the emerging biases are discussed. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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  • Kim, Moshe, 1988. "The Structure of Technology with Endogenous Capital Utilization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 111-130, February.
    • Handle: RePEc:ier:iecrev:v:29:y:1988:i:1:p:111-30
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    Cited by:

    1. Bitros, George C., 2016. "A theory of maintenance expenditures tested on automobile data from Greece," MPRA Paper 70820, University Library of Munich, Germany.
    2. Doms, Mark E, 1996. "Estimating Capital Efficiency Schedules within Production Functions," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 78-92, January.
    3. George Bitros & Elias Flytzanis, 2004. "Utilization and Maintenance in a Model with Terminal Scrapping," Macroeconomics 0411016, University Library of Munich, Germany.
    4. Bitros, George C. & Flytzanis, Elias, 2009. "Utilization and maintenance in a model with scrapping," European Journal of Operational Research, Elsevier, vol. 194(2), pages 551-573, April.

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