IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Nonparametric analysis of multi-output production with joint inputs

Listed author(s):
  • Laurens CHERCHYE
  • Thomas DEMUYNCK
  • Bram DE ROCK
  • Kristof DE WITTE

We present a novel framework for analyzing cost minimizing production behavior in multi-output settings. Our specific focus is on dealing with joint inputs, i.e. inputs that are simultaneously used for the production of multiple outputs. Here, we distinguish between two possible approaches. The cooperative approach takes a centralized perspective and assumes cost minimization at the aggregate firm level. By contrast, the noncooperative approach adopts a decentralized view and assumes cost minimization at the level of the individual output departments, which implies the possibility of free riding behavior for the joint inputs. Our framework is non-parametric in nature, which means that it allows for analyzing production behavior while avoiding (nonverifiable) prior functional structure for the production technology. We show that it naturally extends the existing nonparametric framework for analyzing single output production. We establish rationalizability conditions for cooperative as well as noncooperative production behavior. In addition, we introduce goodness-of-fit measures for evaluating the degree of violation of these conditions. An empirical application to the English and Welsh drinking water and sewerage sector shows the practical usefulness of our framework. Specifically, we compare the empirical validity of the cooperative and noncooperative models for describing the observed production behavior.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by KU Leuven, Faculty of Economics and Business, Department of Economics in its series Working Papers Department of Economics with number ces11.35.

in new window

Date of creation: Dec 2011
Handle: RePEc:ete:ceswps:ces11.35
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ete:ceswps:ces11.35. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (library EBIB)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.