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- Title
Non-convex Technologies and Cost Functions: Definitions, Duality and Nonparametric Tests of Convexity.
- Authors
Briec, Walter; Kerstens, Kristiaan; Eeckaut, Philippe Vanden
- Abstract
This contribution is the first systematic attempt to develop a series of nonparametric, deterministic technologies and cost functions without maintaining convexity. Specifically, we introduce returns to scale assumptions into an existing non-convex technology and, dual to these technologies, define non-convex cost functions that are never lower than their convex counterparts. Both non-convex technologies and cost functions (total, ray-average and marginal) are characterized by closed form expressions. Furthermore, a local duality result is established between a local cost function and the input distance function. Finally, nonparametric goodness-of-fit tests for convexity are developed as a first step towards making it a statistically testable hypothesis.
- Subjects
NONPARAMETRIC statistics; DUALITY theory (Mathematics); PRICES; ECONOMICS
- Publication
Journal of Economics, 2004, Vol 81, Issue 2, p155
- ISSN
0931-8658
- Publication type
Article
- DOI
10.1007/s00712-003-0620-y