Abstract
This paper examines a generalization of cost-production duality for regulated firms. It derives an equivalency between the production function and conditional factor demands for the case where the firm's optimization problem is subject to a set of additional (regulatory) constraints. This procedure is extended to an optimization problem within a dynamic framework which leads to the recovery of the firm's technology.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Averch, H. and L. R. Johnson. (1962). “Behavior of the Firm Under Regulatory Constraint.” American Economic Review 52, 1053-1069.
Bronsard, C., P. Ouellette and L. Salvas-Bronsard. (1994). “Politique financière de la firme et système complet de demande de facteur.” Économie et Prévision, numéro 112, 139-145.
Cowing, T. G. (1980). “The Effectiveness of Rate of Return Regulation: An Empirical Test Using Profit Function.” In M. Fuss and D. McFadden (eds.), Production Economics, a Dual Approach to Theory and Applications. Amsterdam: North-Holland.
Diewert, W. E. (1971), “An Application of the Shephard Duality Theorem: A Generalized Leontieff Production Function.” Journal of Political Economy 79, 481-507.
Diewert, W. E. (1981). “The Theory of Total Factor Productivity Measurement in Regulated Industries.” In T. G. Cowing and R. E. Stevenson (eds.), Productivity Measurement in Regulated Industries. New York: Academic Press.
Färe, R. and J. Logan. (1983). “The Rate-of-Return Regulated Firm: Cost and Production Duality.” The Bell Journal of Economics 14(2), 405-414.
Färe, R. and J. Logan. (1993). “Duality Theory and Value Constraint.” Scottish Journal of Political Economy 40(3), 330-334.
Fuss, M. and L. Waverman. (1983). “Regulation and the Multiproduct Firm: The Case of Telecommunication in Canada.” In G. Fromm (ed.), Studies in Public Regulation. Cambridge: MIT Press.
Lasserre, P. and P. Ouellette. (1994). “Factor Demands, Cost Functions, and Technology Measurements for Regulated Firms.” Canadian Journal of Economics 27(1), 218-242.
Lasserre, P. and P. Ouellette. (1999). “Dynamic Duality, Factor Demands, and Technology Measurements Under Arbitrary Expectations.” Journal of Productivity Analysis 11, 219-241.
Ouellette, P. and S. Vigeant. (2000). “Technological Choices and Regulation: The Case of the Canadian Manufacturing Sectors.” Mimeo, University of Alberta.
Ouellette, P. and S. Vigeant. (2001). “On the Existence of a Regulated Production Function.” Journal of Economics 73(2), 193-200.
Ouellette, P., P. Petit and S. Vigeant. (2000). “Investment and Regulation: The Case of the Canadian Air Carriers.” Mimeo, Université du Québec à Montréal.
Shephard, R. (1953). Cost and Production Functions. Princeton: Princeton University Press.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Ouellette, P., Vigeant, S. Cost and Production Duality: The Case of the Regulated Firm. Journal of Productivity Analysis 16, 203–224 (2001). https://doi.org/10.1023/A:1012597904904
Issue Date:
DOI: https://doi.org/10.1023/A:1012597904904