All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

Pierre Ouellette and Stéphane Vigeant
''Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition''
( 2017, Vol. 37 No.3 )
The duality between cost and production functions has been thoroughly studied and is well-known. A given set of assumptions on the technology implies a set of restrictions on the Jacobian of the cost function and on a subset of its Hessian matrix. The vector of second derivatives of the cost function with respect to the input prices and the output has not been fully characterized, however. In this note, we present a necessary and sufficient condition to ensure that the components of this vector are all strictly positive. That is, we specify the condition for all conditional demand functions to be simultaneously increasing in output. This condition is interpreted as a strengthening of the quasi-concavity of the production function.
Keywords: Output effects, cost minimization, Hessian matrix, conditional input demands, cost function, duality.
JEL: D2 - Production and Organizations: General
Manuscript Received : Feb 09 2017 Manuscript Accepted : Jul 08 2017

  This abstract has been downloaded 1140 times                The Full PDF of this paper has been downloaded 153784 times