Journal
JOURNAL OF ECONOMICS-ZEITSCHRIFT FUR NATIONALOKONOMIE
Volume 81, Issue 2, Pages 155-192Publisher
SPRINGER-VERLAG WIEN
DOI: 10.1007/s00712-003-0620-y
Keywords
nonparametric technologies and cost functions; non-convexity; non-parametric test of convexity
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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.
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