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Testing cost vs. profit function


  • Frank Asche
  • Subal C. Kumbhakar
  • Ragnar Tveterås


The empirical literature on estimation of production technology mostly focuses on estimation of dual cost functions. Estimation of a profit function is not that common. Here, we formally test whether the production technology should be represented by a cost or profit function. We also derive elasticities associated with the long-run profit function from the estimated cost function.

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  • Frank Asche & Subal C. Kumbhakar & Ragnar Tveterås, 2007. "Testing cost vs. profit function," Applied Economics Letters, Taylor & Francis Journals, vol. 14(10), pages 715-718.
  • Handle: RePEc:taf:apeclt:v:14:y:2007:i:10:p:715-718 DOI: 10.1080/13504850600592655

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    References listed on IDEAS

    1. Federico Revelli, 2002. "Testing the taxmimicking versus expenditure spill-over hypotheses using English data," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1723-1731.
    2. Julie Le Gallo & Catherine Baumont & Sandy Dall'erba & Cem Ertur, 2005. "On the property of diffusion in the spatial error model," Applied Economics Letters, Taylor & Francis Journals, vol. 12(9), pages 533-536.
    3. Jose Villaverde, 2005. "Provincial convergence in Spain: a spatial econometric approach," Applied Economics Letters, Taylor & Francis Journals, vol. 12(11), pages 697-700.
    4. Adolfo Maza & Jose Villaverde, 2004. "Regional disparities in the EU: mobility and polarization," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 517-522.
    5. Henri Theil & Dongling Chen & Janet Galvez, 1996. "The spatial correlation of the per capita income of Florida's counties, 1970-1990," Applied Economics Letters, Taylor & Francis Journals, vol. 3(2), pages 71-72.
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    Cited by:

    1. Schmid, Stefan & Kotulla, Thomas, 2011. "50 years of research on international standardization and adaptation--From a systematic literature analysis to a theoretical framework," International Business Review, Elsevier, vol. 20(5), pages 491-507, October.

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