Modeling Mexican agricultural production

Results of time series tests (including unit root and deterministic and stochastic cointegration tests) imply that a mixture of differenced and cointegrated model specifications are warranted for econometric models of Mexican agricultural supplies and input demands. Test results are sensitive to choice of functional form and the set of regressors. For example, share equations should be estimated using differenced data, but output supply and input demand equations generally should not. Generalized Leontief and quadratic functional forms are preferred over the translog. Symmetry and curvature of a restricted profit function are rejected. Short-run output supplies and input demands are generally inelastic. First version received: February 1998/Final version received: November 1998     

Farm price responsiveness and the choice of functional form: An application to rice cultivation in West Malaysia

The estimated responsiveness of farmers to changes in the prices of output or inputs is in general very sensitive to the econometric model used. Using cross-section survey data for farms in marginal rice-growing districts in West Malaysia price elasticities based on estimated input demand equations derived from a quadratic restricted profit function were found to be superior to those derived from translog or Cobb-Douglas production functions or from a translog restricted profit function. The Cobb-Douglas production function is restrictive and should be used sparingly. Restricted profit functions are only believable if the available price data are of high quality.     

Estimating the effect of monopsony power on elasticity estimates

Love and Shumway (1994) developed a nonparametric deterministic test for monopsony market power using a normalized quadratic restricted cost function with one input for which the firm has potential market power. This research examines monopsony power using Lau’s Hessian identity relationships based on the empirical properties of duality theory. Lau’s Hessian identity shows the Hessian matrices are equal under pure competition using an unrestricted profit function, restricted profit function and production function approach. We examine how market power changes in the monopsony case using Lau’s Hessian identity relationships. Results show that there is a difference between the unrestricted and restricted profit function results under monopsony power. The important implication is that if an input or output is potentially in a market subject to market power, that input or output should be modelled as a fixed input or output to correctly recover the underlying technology.     

A New Approach to Modelling Gnp Functions: an Application of Two-Stage Technologies and Modifying Function Framework

This paper first demonstrates that two-stage technologies together with Lewbel's modifying function framework can provide a general procedure for combining profit functions and nominal value-added functions to obtain new specifications of GNP functions suitable for empirical trade analysis. Next, it illustrates the usefulness of this procedure by proposing a new parametric form of a GNP function in which the derived import demand and output supply systems can be easily constrained to be regular, and the functional structure is parsimonious in the number of additional parameters. We also compare our estimates with those obtained using the familiar Translog flexible form. Results indicate that the proposed procedure is feasible and promising as a tool for generating regular and realistic import demand and output supply equations.     

Intertemporal production and intertemporal substitution in output supply and input demand

This article presents an intertemporal model of production with multiple inputs to investigate substitution opportunities facing firms over time. The firm’s intertemporal profit maximization problem is characterized with the familiar cost function, and various intertemporal substitution elasticities are delineated for output supply and input demand. The absence of intertemporal substitution in production can imply production smoothing, and allowance for intertemporal substitution in labour demand reinforces the prediction of the real business cycle model. For aggregate US manufacturing, we find substantial substitution in output supply and labour demand over time due to intertemporal changes in output price and wage rates.     

An estimation of import demand,export supply and technical change for Korea

This paper estimates import demand and export supply functions for Korea based on the translog restricted profit (or GNP) function. It also estimates biases of technological change and applies decomposition analysis to examine the effects of technical change on input demand within the profit function framework. Our findings show that (a) factor inputs, as well as outputs, are, in general, moderately price-elastic and substitutable among each other. (b) the production of investment goods, as well as export goods, is capital-intensive while the production of consumption goods is labout-intensive, (c) technical change is labour-saving and is biased against imports, and (d) there has been a rapid decline of export supply price-elasticity which may be attributable to the rapid growth of export share of GDP (from 4% in 1964 to 38% in 1983). The larger the relative size of export sector and the faster the rate of its growth, the harder will it be to expand export production by drawing own resources from the domestic sector.     

能源投入产出模型的选择：混合型还是价值型*

将投入产出技术用于能源问题的分析时，当前文献中有两类模型：混合型能源投入产出模型和价值型能源投入产出模型，其中价值型模型应用更为广泛。本文从能源平衡方程入手，对这两类模型的本质特点和差异进行了辨析，通过严格证明，得到如下结论：第一，在技术系数矩阵稳定的条件下，出现新的最终需求时，混合型能源投入产出模型仍然保证能源平衡方程的成立，具备一致性。第二，在技术系数矩阵和能源价格矩阵稳定的条件下，出现新的最终需求时，价值型能源投入产出模型无法保证能源平衡方程的成立。虽然价值型能源投入产出模型在初始构建过程中使用了能源平衡方程，但本质上是以价值单位的投入产出方程为根本出发点的，并没有考虑能源平衡方程在新的最终需求发生时是否仍然成立的问题，没有考虑能源使用的一致性。因此，一般情况下混合型能源投入产出模 型更为合理。第三，在某些特殊情况下这两类模型等价：（1）当最终需求结构保持不变，而只有最终需求总量发生变化时；（2）当能源在各使用部门之间的价格完全相同时。这些结论为实际应用中如何选择恰当的能源投入产出模型提供了依据。     

农户油茶供给潜力敏感性分析——基于福建省油茶地块投入产出调查数据

以供给理论为依据,利用油茶地块投入产出调查数据,基于估计的生产函数构建了油茶供给决策模型,并通过LINGO规划软件编程模拟产品价格、要素价格、弹性系数和贴现率等因素变化对油茶供给潜力的影响程度,为引导农户做出正确的油茶生产决策提供依据。模拟结果显示对油茶供给潜力和利润影响最大的是要素投入弹性,其次为产品价格,要素价格和贴现率也有重要的影响。     

A Parametric Estimation of Bank Efficiencies Using a Flexible Profit Function with Panel Data

This paper generalises Kumbhakar's (1996a) single product shadow profit function to a multiproduct one, which in contrast to Berger, Hancock, and Humphrey (1993) is consistent with a firm's profit maximising behaviour. By estimating a parametric translog profit function, which does not require special assumptions about the error distribution, and using panel data from Taiwan's banking industry, the following conclusions can be drawn: (i) Parameter estimates from the translog functional form are more robust than those from the Fuss (non-logarithmic) form. (ii) More than half of all potential variable profits are found to be lost due to inefficiencies. (iii) Greater reduction in profit results from deficient output revenues than from a suboptimal input mix. (iv) The model finds technical progress during the sample period. (v) A type of 'weakly' optimal scope economies is detected, which suggests that the joint production of the two products can increase profits for some banks while not hurting the profits of others.     

A mark-up pricing model for price simulations

This paper develops an input/output model of pricing using a mark-up pricing formula. The connection between mark-up pricing and competitive pricing is analyzed through the determination of sectoral equilibrium profit mark-up rates as a function of the profit rate and the capital intensity of each sector. The model is used to analyze the effects on relative prices and the aggregate price level of exogenous changes in the nominal wage rate, tax rates, the exchange rate and world prices. Exogenous changes in the prices of domestically produced commodities are modelled via the imposition of ad valorem tax rates, which yield a measure of the net effect of the exogenous changes. Simulations are carried out under passive price adjustment as well as adjustment with price ceilings. In this last instance the model calculates the endogenously determined reduction in profit mark-ups. Lastly, empirical results of various simulations are presented using data from the Mexican economy.     

组织距离对虚拟产业集群内企业创新的影响

用组织距离衡量虚拟产业集群内企业间的"组织接近",在双寡头古诺模型的分析框架下,研究组织距离对虚拟产业集群内企业的创新水平、产量和利润的影响。结果表明:在完全信息情况下,虚拟产业集群内企业的创新投入水平越高,则企业联合利润越大;在不完全信息情况下,集群内企业的均衡产量都是其创新投入水平的增函数,但若逆需求函数的斜率较大,则不完全信息对不拥有完全信息的企业的影响较小。最后求得要实现集群内企业的均衡产量随着组织距离的加大而增加则企业的创新水平要满足的条件。     

Constrained output maximization and US agriculture

This paper presents a framework for estimating an indirect production function and then applies it to aggregate US agriculture. Issues addressed include tests of standard hypotheses about the underlying technology (homotheticity, neutral technical change, etc.) as well as examination of consistency in aggregation and the effects of changes in the level of aggregate expenditure on farm output. Since there already exist several studies empirically describing agricultural production technologies with indirect objective functions, one might fairly ask whether this paper really breaks any new ground? We feel that it does. One reason is that existing studies (e.g. Binswanger, 1974; Lopez, 1980; Ball and Chambers, 1982; Ray, 1982; and Weaver, 1983) all rely on either profit or cost functions. To date there appears to be only one study using an indirect production (Appelbaum, 1979), and it is not in agriculture. This seems unfortunate because there are many instances in agriculture for which an indirect production function (or revenue function approach) seems more appropriate. The reason why relates directly to one's belief about the objective function and constraints farmers face. Ultimately, it seems plausible in a certainty framework that producers maximize profits. And since cost minimization and output maximization are just constrained versions of profit maximization, both cost and indirect production functions are more appropriately viewed as restricted profit functions. What differs is the constraint. Assuming cost minimization implies that farmers are constrained by a fixed output which they must produce; in most instances, this is implausible. More likely, the level of output is itself a choice variable. Output maximization, on the other hand, suggests that the main constraint is the amount of money that producers can muster to hire resources. In other words, farmers may face binding constraints in obtaining the profit maximizing level on expenditure on input utilization. One might think that expenditure may not be a binding constraint because there exists a relatively active US credit market. However, the US credit market is far from being perfectly competitive in a stylized sense, and thus, the possibility of a farmer being able to finance a given level of expenditure may be limited.

Readers familiar with the dual approach to production problems may already be asking why these ideas rule out cost functions since it is well known that the cost function is the distance function of the indirect production function (Blackorby et al., 1978)? In principle, therefore, one could always estimate a cost function and then invert it to obtain the indirect production function. There are two problems with this approach: the first is that if output maximization is truly the objective, output is not predetermined and cannot be treated as exogenous in cost function estimation. Second, estimation of direct and indirect functions using the same data set does not always yield comparable results. Estimation of a transcendental logarithmic (translog) indirect production function and a translog cost function, separately, does not generally yield identical estimates of the Allen elasticities of substitutions. Solving the first problem in simple, but the second suggests that estimation should proceed on the basis of the objective function the researcher deems most appropriate. Therefore, if output maximization is more plausible than cost minimization an indirect production function should be used.

The plan of the paper is as follows. We first outline the theoretical developments necessary to our approach (included are conditions necessary for consistent aggregation over firms). We then present estimates of an indirect production function and use these estimates to investigate the plausibility of various restrictions on the technology, consistency in aggregation, substitution possibilities in agricultural production, and the effect of expenditure on agricultural input utilization. The paper closes with a discussion of the results and suggestions for future research.     

A cost-based analysis of scale economies in the French auto industry

This paper examines cost relationships in the French automobile industry using a translog cost function with domestic capital and labor and domestic and foreign intermediate goods inputs. The findings suggest scale economies at lower output levels, but diseconomies at mean and maximum output levels. Cross price elasticity estimates implied all input pairs except capital and foreign parts and labor and domestic parts are substitutes. Except for foreign components, direct price elasticity estimates were inelastic. Thus, further integration of Europe and reduction of foreign input prices may substantially increase their quantity demanded and decrease the demand for domestic labor and parts.     

Choice of the empirical definition of zero in the translog multiproduct cost functional form

The translog cost function is valuable to researchers for empirical analysis in themodelling of indirect cost and profit functions. A flaw of the functional form is in themodelling of zero output values. This study examined the impacts of empirical definition of zero output values on price elasticities, economies of scope and scale, using the translog cost function. Estimation of a system of cost and factor share equations with regularity condition imposed was conducted. Results show that the choice of default values affects policy recommendations.     

Intertemporal Output and Employment Effects of Public Infrastructure Capital: Evidence from 12 OECD Economies

This paper utilises an intertemporal optimisation framework to study the effects of public infrastructure capital on output supply and input demands in 12 OECD countries. We find that in all 12 countries: (i) public capital has positive long-run effects on both output supply and input demands (ii) its mean short-run rates of return are fairly low, while the corresponding long-run rates are much higher but declining over time. These findings underscore important under-investment gaps in infrastructure during the 1970s and 1980s; these gaps however narrowed down significantly (in a few cases completely) by the early 1990s.     

Modeling the short-run costs of changes in water availability in a desert city: a modified input-output approach

This paper investigates the impact of change in sectoral water supply on employment, value-added output, and indirect business tax, in Maricopa County, Arizona using input–output model. We developed extended modified input–output approach that incorporates each source of water as a separate sector, and that allows for substitution between water sources, and estimated the economic impact of a change in surface water supplies under two scenarios. Scenario I assumes that total water supply/use decreases by 1%, but the reduction comes only from surface water use, holding groundwater use constant. Scenario II assumes that surface water supply/use in all industries decreases by 1%, and the reduction in surface water use is replaced by the exact amount of more expensive groundwater. We found that the magnitude of economic impact depends on consumer’s responsiveness to water price change. When price elasticity of water demand is relatively low (≤0.2), the economic impact of a 1% reduction in surface water supplies was smaller than under the first scenario. However, the more water users in all industries are responsive to a change in water price, the bigger are economic impacts in terms of reductions in jobs, value added, and indirect business taxes.     

A requiem for the Australian motor vehicle industry

The last automobiles manufactured in Australia rolled off the assembly line in the fall of 2017. This article looks at some of the factors that have impacted the industry since 1968 and led to its demise, including a high value of the Australian dollar in recent years, strategic decisions on the part of parent companies and reductions in governmental support and tariff protection. We estimate a cost function for the industry with inputs of domestic capital and labour and insourced intermediate goods as well as imported intermediate goods. The findings include that the remaining firms are operating in an output range of strongly statistically significant economies of scale, and that all of the input pairs are substitutes except for statistically significant complementary relationships between capital and domestic intermediate goods and labour and foreign intermediate goods. Unexpected results are that an increase in output per assembly plant appears to have a positive effect on total cost, while an increase in the effective tariff and an increase in the number of models appears to have a negative effect. One explanation for these robust but unexpected findings may be that total profit contribution is a part of total cost, and, therefore, factors that increase total profit contribution will also increase total cost.     

Malmquist and Törnqvist productivity indexes: returns to scale and technical progress with imperfect competition

Caves, Christensen and Diewert proposed a method for estimating a theoretical productivity index for a firm using Törnqvist input and output indexes, augmented by exogenous estimates of local returns to scale. However, in order to implement their method, they assumed that the firm maximized revenue in each period, conditional on the observed input vector in each period, taking output prices as fixed. This assumption is not warranted when there are increasing returns to scale. Thus in the present paper, it is assumed that the firm solves a monopolistic profit maximization problem when there are increasing returns to scale and the results of Caves, Christensen and Diewert are modified in accordance with this assumption.     

Capacity utilization under dynamic profit maximization

Empirically implementable measures of optimal capacity utilization are developed from the dynamic profit maximization perspective. The primal measure is based on behavior of the firm's supply along an optimal path to the steady state. The dual measure is based on the behavior of the dynamic value function in the stock of the quasi-fixed input. Rates of optimal capacity utilization are estimated for the U.S. food processing and distribution sector over the period 1948–1991.     

Asymmetric adjustment costs and the dynamics of housing supply

This paper examines aggregate dynamics on the supply side of the housing market. The representative firm's intertemporal profit maximisation problem is considered under asymmetric adjustment costs. The hypothesis of asymmetric adjustment costs is also examined empirically using Irish data. Several interesting insights into the dynamics of housing supply are uncovered. These include support for the proposition that the adjustment costs of expanding housing output are greater than those associated with a contraction, evidence of threshold points beyond which adjustment starts to speed up and also the existence of a continuum of equilibria between these thresholds where no adjustment occurs at all.