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Calibration of Cost Functions for Individual Firms as an Alternative to Estimation: An Application to New Brunswick Peat-Mining Firms

Author

Listed:
  • C M Dufournaud

    (Department of Geography, University of Waterloo, Waterloo, Ontario N2L 3G1, Canada)

  • J T Quinn
  • A Olinsky
  • B G Warner

    (Department of Geography, and Wetlands Research Centre, University of Waterloo, Waterloo, Ontario N2L 3G1, Canada)

Abstract

A method for calibrating the total annual cost function of a single firm is developed by using optimal control and assuming rational behavior of the firm. The method is applied to peat-harvesting firms in New Brunswick, but has wider applicability. Information on the exogenous variables is available without resorting to surveys of individual firms, leaving as endogenous the variables specific to a firm. The results are sufficiently promising that the approach suggested herein may serve as a useful set of parameters for individual firms in follow-up work.

Suggested Citation

  • C M Dufournaud & J T Quinn & A Olinsky & B G Warner, 1999. "Calibration of Cost Functions for Individual Firms as an Alternative to Estimation: An Application to New Brunswick Peat-Mining Firms," Environment and Planning A, , vol. 31(3), pages 551-558, March.
    • Handle: RePEc:sae:envira:v:31:y:1999:i:3:p:551-558
    DOI: 10.1068/a310551
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    References listed on IDEAS

    as
    1. Conrad,Jon M. & Clark,Colin Whitcomb, 1988. "Natural Resource Economics," Cambridge Books, Cambridge University Press, number 9780521331883, October.
    2. Conrad,Jon M. & Clark,Colin Whitcomb, 1988. "Natural Resource Economics," Cambridge Books, Cambridge University Press, number 9780521337694, October.
    3. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
    4. Ford, J L & Warford, J J, 1969. "Cost Functions for the Water Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 18(1), pages 53-63, November.
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