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Non-Parametric Production Analysis under Alternative Price Conditions

  • Laurens CHERCHYE
  • Thierry POST

The literature on non-parametric production analysis has formulated tests for profit maximizing behavior that do not require a parametric specification of technology. Negative test results have conventionally been interpreted as inefficiency, or have been attributed to data perturbations. In this paper, we exploit the possibility that negative test results reveal violations of the underlying neoclassical assumption that prices are exogenously fixed and perfectly certain. We propose non-parametric tests that do allow for endogenous price formation and price uncertainty. In addition, we investigate how to recover the technology and how to forecast behavior in new economic situations.

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0105.

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Date of creation: Jan 2001
Date of revision:
Handle: RePEc:ete:ceswps:ces0105
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  1. DEBREU, Gérard, . "Economies with a finite set of equilibria," CORE Discussion Papers RP 67, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  16. Banker, Rajiv D & Maindiratta, Ajay, 1988. "Nonparametric Analysis of Technical and Allocative Efficiencies in Production," Econometrica, Econometric Society, vol. 56(6), pages 1315-32, November.
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