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Nonparametric analysis of separable production technologies with intermediate inputs

Author

Listed:
  • Laurens Cherchye

    (University of Leuven (KU Leuven))

  • Bram Rock

    (Université Libre de Bruxelles and Department of Economics, University of Leuven (KU Leuven))

Abstract

We introduce a nonparametric methodology for analyzing production technologies characterized by weakly separable structures involving intermediate inputs. Weakly separable production functions allow for modeling production stages where raw inputs aggregate into intermediate inputs before interacting with other factors of production. We establish nonparametric testable conditions for cost minimizing behavior that accommodate production with intermediate inputs. These conditions offer practical tools for empirical analysis of separable production processes. We show that they provide a useful basis for measuring productive efficiency and for identifying shadow prices of intermediate inputs. Additionally, we discuss potential extensions to handle jointly used raw inputs, multiple final outputs, and scenarios with limited price and quantity information.

Suggested Citation

  • Laurens Cherchye & Bram Rock, 2025. "Nonparametric analysis of separable production technologies with intermediate inputs," Journal of Productivity Analysis, Springer, vol. 63(3), pages 245-254, June.
    • Handle: RePEc:kap:jproda:v:63:y:2025:i:3:d:10.1007_s11123-024-00747-x
    DOI: 10.1007/s11123-024-00747-x
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