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Production Economics: A Dual Approach to Theory and Applications - 1st Edition - ISBN: 9780444850133, 9781483259031

Production Economics: A Dual Approach to Theory and Applications, Volume 2

1st Edition

Applications of the Theory of Production

Editors: Melvyn Fuss Daniel McFadden
eBook ISBN: 9781483259031
Imprint: North Holland
Published Date: 1st January 1978
Page Count: 360
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Table of Contents

Introduction to the Series



Part III. An Analysis of the Concept of Real Value-Added

III.1 Duality, Intermediate Inputs and Value-Added

1. Introduction

2. Duality and Value-Added

3. Value-Added in Constant Prices

4. The Measurement of Total Productivity

5. Introducing Imperfect Competition

6. Conclusions

III.2 Hicks' Aggregation Theorem and the Existence of a Real Value-Added Function

1. Introduction

2. Hicks' Aggregation Theorem in the Consumer Context

3. Duality Between Direct and Conditional Indirect Utility Functions

4. Hicks' Aggregation Theorem in the Producer Context

5. The Duality Between Value-Added "Production" and Cost Functions

6. Concluding Remarks

7. Proofs of Theorems

III.3 Homotheticity and Real Value-Added in Canadian Manufacturing

1. Introduction

2. Real Value-Added and the Production Structure

3. The Approximate Translog Cost Function

4. Homotheticity and Homogeneity

5. The Canadian Manufacturing Data

6. The Estimation of the Production Structure

7. An Alternative Real Value-Added Formulation

8. Weak Homotheticity

9. Double Deflation and Real Value-Added

10. Conclusion

Part IV. Empirical Applications of Production Theory: Micro-Economic Data

IV.1 Estimation Techniques for the Elasticity of Substitution and Other Production Parameters

1. Introduction

2. Cost Functions

3. The Elasticity of Substitution

4. The Specification of the ACMS Model

5. Properties of the Elasticity of Substitution

6. An Econometric Model of the Electricity Generation Industry

7. Appendix

IV.2 Measurement of the Elasticity of Factor Substitution and Bias of Technical Change

1. Introduction

2. Notation

3. Growth Equations

4. Production Relations

5. A Non-Identification Theorem

6. Necessary Conditions for Factor Augmenting Technical Change

7. Sufficient Conditions for Factor Augmenting Technical Change

8. Identification for Capital Augmentation

9. Identification for Finite Parameter Families of Augmentation Functions

10. Extensions and Conclusions

11. Appendix: Generalization to Non-Constant Returns

IV.3 The Identification of Technical Change in the Electricity Generating Industry

1. Introduction

2. Notation

3. Identification Problems in the Measurement of Technical Change

4. The Industry and the Data

5. The Measurement of Disembodied Technical Change

6. The Measurement of Embodied Technical Change

7. The Measurement of Total Technical Change

8. The Bias of Technical Change

9. Concluding Remarks

IV.4 Factor Substitution in Electricity Generation: A Test of the Putty-Clay Hypothesis

1. Introduction

2. The Basic Model

3. The Model Applied to Electricity Generation

4. Tests of the Structure of Technology

5. Estimation of the Putty-Clay Model

6. Conclusion

7. Appendices

IV.5 The Effectiveness of Rate-of-Return Regulation: An Empirical Test Using Profit Functions

1. Introduction

2. The Averch-Johnson Model of a Regulated Firm

3. The Profit Function for a Regulated Firm

4. Statistical Tests of Regulatory Effectiveness

5. Comparison with Previous Studies

6. Conclusions

7. Appendix

Part V. Empirical Applications of Production Theory: Macro-Economic Data

V.1 An Aggregate Model with Multi-Product Technologies

1. Introduction

2. Multi-Product Technologies and Final Demand

3. Jointness and Separability of the Cost Function

4. The Approximate Translog Cost Function

5. Approximate Separability and Non-Jointness of the Translog Cost Function

6. An Aggregate Canadian Production Model

7. Estimation and Hypothesis Testing

8. Appendix: Data

V.2 Factor Substitution in the Interindustry Model and the Use of Inconsistent Aggregation

1. Introduction

2. The Model

3. The Data

4. Estimation

5. Empirical Results

6. 1961 Predictions

7. Inconsistent Shadow Elasticities of Substitution

8. A Directional Shadow Elasticity of Substitution

9. Inconsistent Directional Shadow Elasticity of Substitution

10. Appendix


Author Index

Subject Index


Contributions to Economic Analysis: Production Economics: A Dual Approach to Theory and Applications, Volume 2 focuses on the theory of production from the standpoint of the "dual", the relationships between economic observables which are dual to physical technology.

The selection first ponders on duality, intermediate inputs and value-added, Hicks' aggregation theorem and the existence of a real value-added function, and homotheticity and real value-added in Canadian manufacturing. Discussions focus on real value-added and the production structure, estimation of the production structure, double deflation and real value-added, measurement of total productivity, and duality between direct and conditional indirect utility functions. The book then examines the estimation techniques for the elasticity of substitution and other production parameters and measurement of the elasticity of factor substitution and bias of technical change.

The publication takes a look at the identification of technical change in the electricity generating industry, factor substitution in electricity generation, and the effectiveness of rate-of-return regulation. Topics include statistical tests of regulatory effectiveness, profit function for a regulated firm, tests of the structure of technology, identification problems in the measurement of technical change, and measurement of disembodied technical change.

The selection is a valuable source of information for economists and researchers interested in production economics.


No. of pages:
© North Holland 1978
1st January 1978
North Holland
eBook ISBN:

Ratings and Reviews

About the Editors

Melvyn Fuss

Daniel McFadden