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

Author

Listed:
  • Pierre Ouellette

    (Department of Economics, Université du Québec à Montréal)

  • Stéphane Vigeant

    (LEM UMR 9221, Université de Lille; IESEG School of Management)

Abstract

oroughly 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

Suggested Citation

  • Pierre Ouellette & Stéphane Vigeant, 2017. "Conditional Factor Demands and Positive Output Effects: A Necessary and Sufficient Condition," Economics Bulletin, AccessEcon, vol. 37(3), pages 1549-1554.
    • Handle: RePEc:ebl:ecbull:eb-17-00115
    as

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    References listed on IDEAS

    as
    1. Alarie, Yves & Bronsard, Camille & Ouellette, Pierre, 1990. "Preferences and normal goods: A necessary and sufficient condition," Journal of Economic Theory, Elsevier, vol. 51(2), pages 423-430, August.
    2. Leroux, Alain, 1987. "Preferences and normal goods: A sufficient condition," Journal of Economic Theory, Elsevier, vol. 43(1), pages 192-199, October.
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    More about this item

    Keywords

    Output effects; cost minimization; Hessian matrix; conditional input demands; cost function; duality.;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations

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