Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 241: On the Econometric Analysis of Production When There Are No Output Data

Erik Mellander and Bengt-Christer Ysander
Additional contact information
Erik Mellander: Research Institute of Industrial Economics (IFN)
Bengt-Christer Ysander: University of Uppsala

Abstract: A general method is described which allows a production activity to be analyzed by means of input data only. According to duality theory, the input cost shares can be completely specified without any information about output if the technology is homothetic. It is demonstrated that these cost shares can yield information about elasticities of substitution and factor demand and on productivity development. Moreover, the system of share equations can be generalized to allow for technical and allocative inefficiency and the effects of these inefficiencies on total costs and input demands can be estimated.

Keywords: Production measures; elasticity of substitution; inefficiency; estimation method

JEL-codes: C81; D22

42 pages, December 1989

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