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Testing for production with complementarities

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  • Pawel Dziewulski
  • John Quah

Abstract

Suppose we observe a finite number of input decisions made by a firm, as well as the prices at which those inputs were acquired. What conditions on the set of observations are necessary and sufficient for it to be consistent with a firm choosing inputs to maximize profit, subject to a production function exhibiting production complementarities? In this paper, we develop an axiomatic characterisation of this hypothesis and also develop a test that can be easily applied to finite data sets.

Suggested Citation

  • Pawel Dziewulski & John Quah, 2014. "Testing for production with complementarities," Economics Series Working Papers 722, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:722
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    References listed on IDEAS

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    Cited by:

    1. Nocke, Volker & Schutz, Nicolas, 2017. "Quasi-linear integrability," Journal of Economic Theory, Elsevier, vol. 169(C), pages 603-628.

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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