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Flexible Functional Forms and Global Curvature Conditions
TL;DR: In this article, the authors developed two methods for imposing curvature conditions globally in the context of cost function estimation, based on a generalization of a functional form first proposed by McFadden.
Abstract: Empirically estimated flexible functional forms frequently fail to satisfy the appropriate theoretical curvature conditions. Lau and Gallant and Golub have worked out methods for imposing the appropriate curvature conditions locally, but those local techniques frequently fail to yield satisfactory results. We develop two methods for imposing curvature conditions globally in the context of cost function estimation. The first method adopts Lau's technique to a generalization of a functional form first proposed by McFadden. Using this Generalized McFadden functional form, it turns out that imposing the appropriate curvature conditions at one data point imposes the conditions globally. The second method adopts a technique used by McFadden and Barnett, which is based on the fact that a non-negative sum of concave functions will be concave. Our various suggested techniques are illustrated using the U.S. Manufacturing data utilized by Berndt and Khaled
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TL;DR: The authors discusses recent developments in the econometric approach to the estimation of stochastic frontiers such as production, costs, and profit functions, and areas requiring further work are also noted.
809 citations
TL;DR: In this paper, a panel-data framework is used to model firm-specific technical inefficiency which is allowed to vary over time, and the estimation method suggested uses a parametric production function and cost-minimization hypothesis.
795 citations
TL;DR: The evidence in favour of ''Jevons Paradox'' is far from conclusive, but it does suggest that economywide rebound effects are larger than is conventionally assumed and that energy plays a more important role in driving productivity improvements and economic growth than is conventional assumed as mentioned in this paper.
536 citations
Cites background from "Flexible Functional Forms and Globa..."
...In many applications, such as CGE modelling, these conditions need to be satisfied for all input combinations, but empirically estimated cost functions sometimes violate these conditions (Diewert and Wales, 1987)....
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TL;DR: This working paper is the first draft of an overview and commentary on the papers to appear in a Macroeconomic Dynamics Special Issue on Measurement with Theory, which is part of a larger initiative to promote "measurement with theory" in economics.
Abstract: This paper is the introduction to the forthcoming Macroeconomic Dynamics Special Issue on Measurement with Theory. The Guest Editors of the special issue are William A. Barnett, W. Erwin Diewert, Shigeru Iwata, and Arnold Zellner. The authors of this detailed introduction and commentary are William A. Barnett, W. Erwin Diewert, and Arnold Zellner. The included papers are part of a larger initiative to promote measurement with theory in economics.
502 citations
TL;DR: In this article, the authors investigate the nature of price competition among firms that produce differentiated products and compete in markets that are limited in extent, and propose an instrumental variables series estimator for the matrix of cross price response coefficients, demonstrate that their estimator is consistent, and derive its asymptotic distribution.
Abstract: We investigate the nature of price competition among firms that produce differentiated products and compete in markets that are limited in extent. We propose an instrumental variables series estimator for the matrix of cross price response coefficients, demonstrate that our estimator is consistent, and derive its asymptotic distribution. Our semiparametric approach allows us to discriminate among models of global competition, in which all products compete with all others, and local competition, in which products compete only with their neighbors. We apply our semiparametric estimator to data from U.S. wholesale gasoline markets and find that, in this market, competition is highly localized.
490 citations
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TL;DR: The theory of least squares and analysis of variance has been studied in the literature for a long time, see as mentioned in this paper for a review of some of the most relevant works. But the main focus of this paper is on the analysis of variance.
Abstract: Algebra of Vectors and Matrices. Probability Theory, Tools and Techniques. Continuous Probability Models. The Theory of Least Squares and Analysis of Variance. Criteria and Methods of Estimation. Large Sample Theory and Methods. Theory of Statistical Inference. Multivariate Analysis. Publications of the Author. Author Index. Subject Index.
5,182 citations
TL;DR: Ebsco as mentioned in this paper focuses on additive and homogeneous production possibility frontiers that have played an important role in formulating statistical tests of the theory of production and characterizes the class of production possibility frontier that are homogeneous and additive.
Abstract: Focuses on additive and homogeneous production possibility frontiers that have played an important role in formulating statistical tests of the theory of production. Characterization of the class of production possibility frontiers that are homogenous and additive; Representation of the production possibility frontier; Statistical tests of the theory of production. (Из Ebsco)
2,619 citations
TL;DR: In this paper, the authors use the Shephard duality theorem to obtain a system of derived demand equations which are linear in the technological parameters, thus facilitating econometric estimation.
Abstract: The paper indicates how the Shephard duality theorem may be utilized in order to obtain a system of derived demand equations which are linear in the technological parameters, thus facilitating econometric estimation. This theorem states that technology may be equivalently represented by either a production function or a cost function, and a proof of the theorem is given. The chosen functional form is a quadratic form in the square roots of input prices and is a generalization of the Leontief cost function. The generalization has the property that it can attain any set of partial elasticities of substitution using a minimal number of parameters.
1,140 citations
01 Jan 1983
TL;DR: The authors acknowledge the help of three referees and of John Pencavel on several earlier drafts, as well as the assistance of the modelers whose work is referred to in the paper.
Abstract: We wish to acknowledge the help of three referees and of John Pencavel on several earlier drafts, as well as the assistance of the modelers, whose work is referred to in the paper. They corrected our lack of understanding of their work and provided many other helpful comments. Excellent research and bibliographical assistance have been provided by Debbie Fretz, Radwan Shaban, and Janet Stotsky. Helpful comments have been made by Charles Ballard, Michael Boskin, Lans Bovenberg, Sylvester Damus, Harvey Galper, Glenn Harrison, Gordon Lenjosek, Jack Mutti, Serena Ng, T. N. Srinivasan, Charles Stuart, and Eric Toder. The authors also acknowledgefinancial support from the National Bureau of Economic Research, the National Science Foundation, International Business Machines, and the Social Sciences and Humanities Research Council: Ottawa, Canada.
1,036 citations
520 citations