Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition - Archive ouverte HAL
Article Dans Une Revue Economics Bulletin Année : 2017

Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition

Pierre Ouellette
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Stephane Vigeant

Résumé

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 quasiconcavity of the production function.
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Dates et versions

hal-02988112 , version 1 (04-11-2020)

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  • HAL Id : hal-02988112 , version 1

Citer

Pierre Ouellette, Stephane Vigeant. Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition. Economics Bulletin, 2017, 37 (3), pp.1549-1554. ⟨hal-02988112⟩
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