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Duality in Production

In: Handbook of Production Economics

Author

Listed:
  • W. Erwin Diewert

    (University of British Columbia
    UNSW)

Abstract

The chapter reviews the application of duality theory in production theory. Duality theory turns out to be a useful tool for two reasons: (i) it leads to relatively easy characterizations of the properties of systems of producer derived demand functions for inputs and producer supply functions for outputs and (ii) it facilitates the generation of flexible functional forms for producer demand and supply functions that can be estimated using econometrics. The chapter focuses on describing the properties of five functional forms that have been used in the production literature: (i) the constant elasticity of substitution (CES), (ii) the generalized Leontief, (iii) the translog, (iv) the normalized quadratic, and (v) the Konüs Byushgens Fisher functional forms. The applications of GDP functions and joint cost functions to various areas of applied economics are explained.

Suggested Citation

  • W. Erwin Diewert, 2022. "Duality in Production," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 3, pages 57-168, Springer.
    • Handle: RePEc:spr:sprchp:978-981-10-3455-8_21
    DOI: 10.1007/978-981-10-3455-8_21
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    Cited by:

    1. W. Erwin Diewert & Koji Nomura & Chihiro Shimizu, 2025. "Estimating flexible functional forms using macroeconomic data," Empirical Economics, Springer, vol. 69(5), pages 2671-2697, November.
    2. Mardones, Cristian & Henríquez, Valentina, 2025. "Estimating elasticities of substitution and price elasticities of industrial demand using different levels of aggregation for energy inputs," Energy, Elsevier, vol. 336(C).
    3. Chao Chiung Ting, 2020. "Lucas Paradox, Declining Labor Share, Tendency of Rate of Profit to Fall of Karl Marx and Growth Theory of the Firm," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(9), pages 1-53, September.
    4. Yang, Haoran & Chen, Qiu, 2025. "Material balance and correction for the measurement of green total factor productivity growth," Energy Economics, Elsevier, vol. 148(C).

    More about this item

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    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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