Skip to main content
SpringerLink
Log in

Determining output shadow prices for a cost-constrained technology

  • Articles
  • Published:
Journal of Economics Aims and scope Submit manuscript

Abstract

We develop a method for computing output shadow prices when total cost and input prices are exogenous, using the indirect output distance function of Shephard (1974). We show that indirect distance function shadow price imputations for output prices are the same to a proportional constant as marginal cost imputations. We motivate our results by relating them to the problem of valuing the output of nonprofit institutions, to some measurement issues for noncompetitive industries, and to a problem of imputing sales of the commercial banking industry to consuming sectors of the economy in the national income accounts.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Barnett, W. (1980): “Economic Monetary Aggregates.”Journal of Econometrics 14: 11–48.

    Google Scholar 

  • Baumol, R. (1987): “Ramsey Pricing.” InThe New Palgrave Dictionary of Economics, Volume 4, edited by J. Eatwell, M. Milgate, and P. Newman. New York: The Stockton Press.

    Google Scholar 

  • Baumol, R., Bailey, E., and Willig, R. (1977): “Weak Invisible Hand Theorems on the Sustainability of Prices in a Multiproduct Monopoly.American Economic Review 67: 350–365.

    Google Scholar 

  • Donovan, D. J. (1978): “Modeling the Demand for Liquid Assets: An Application to Canada.”International Monetary Fund Staff Papers 25: 676–704.

    Google Scholar 

  • Färe, R. (1988):Fundamentals of Production Theory. Berlin: Springer.

    Google Scholar 

  • Färe, R., and Grosskopf, S. (1990): “A Distance Function Approach to Price Efficiency.”Journal of Public Economics 43: 123–126.

    Google Scholar 

  • Färe, R., and Lehmijoki, U. (1987): “On Quasi-Convexity of the Cost Function.”Scandinavian Journal of Economics 89: 115–118.

    Google Scholar 

  • Fixler, D. F., and Zieschang, K. D. (1991): “Measuring the Nominal Value of Financial Services in the National Income Accounts.”Economic Inquiry 24: 53–68.

    Google Scholar 

  • Hancock, D. (1985): “The Financial Firm: Production with Monetary and Non-monetary Goods.”Journal of Political Economy 93: 859–880.

    Google Scholar 

  • Jacobsen, S. (1972): “On Shephard's Duality Theorem.”Journal of Economic Theory 4: 458–464.

    Google Scholar 

  • Lehmijoki, U. (1984): “Notes on Quasi-Convexity of the Cost Function.”Scandinavian Journal of Economics 86: 385–389.

    Google Scholar 

  • Ramsey, F. (1927): “A Contribution to the Theory of Taxation.”Economic Journal 37: 47–61.

    Google Scholar 

  • Reece, W. S., and Zieschang, K. D. (1987): “Output Price Indices for Regulated Monopoly.”Economics Letters 25: 85–89.

    Google Scholar 

  • Shephard, R. W. (1974):Indirect Production Functions. Meisenheim am Glan: Anton Hain.

    Google Scholar 

  • Weizsäcker, C. C. von (1984): “Free Entry into Telecommunications?”Information Economics and Policy 1: 197–216.

    Google Scholar 

Download references

Author information

Author notes

  1. Rolf Färe

    Present address: Department of Economics, Southern Illinois University, 62901, Carbondale, IL, USA

  2. Kimberly D. Zieschang

    Present address: Division of Price and Index Number Research, Bureau of Labor Statistics, Room 4013, 600 E Street, N. W., 20212, Washington, D. C., USA

Authors and Affiliations

    Authors
    1. Rolf Färe
      View author publications

      You can also search for this author in PubMed Google Scholar

    2. Kimberly D. Zieschang
      View author publications

      You can also search for this author in PubMed Google Scholar

    Additional information

    Thanks are due to a very informed and helpful referee.

    Rolf Färe supported by IHE, Lund, Sweden.

    Rights and permissions

    Reprints and permissions

    About this article

    Cite this article

    Färe, R., Zieschang, K.D. Determining output shadow prices for a cost-constrained technology. Zeitschr. f. Nationalökonomie 54, 143–155 (1991). https://doi.org/10.1007/BF01227082

    Download citation

    • Received:

    • Revised:

    • Issue Date:

    • DOI: https://doi.org/10.1007/BF01227082

    Keywords

    Search

    Navigation