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A Nonhomothetic Generalized Leontief Cost Function Based on Pooled Data

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  • Nakamura, Shinichiro

Abstract

Factor demand studies of Komiya, Ozaki, Lau and Tamura based upon detailed cross-section data on individual production units have found that the nonhomothetic factor limitational ( NHT-FL) demand system, a nonhomothetic version of the Leontief fixed coefficient model, well explains the data. These results, however, have mostly been ignored in the current literature on flexible functional forms, and in fact none of the well-known nonhomothetic flexible cost function forms includes the NHT-FL model. I introduce a new nonhomothetic form of the Generalized Leontief (GL) cost function, which includes the NHT-FL model as a special case. Empirical application to a pooled data set of the Japanese iron & steel industry indicates that his form is superior to the translog, Diewert-Wales GL, and Berndt-Khaled GL forms. Copyright 1990 by MIT Press.

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  • Nakamura, Shinichiro, 1990. "A Nonhomothetic Generalized Leontief Cost Function Based on Pooled Data," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 649-656, November.
    • Handle: RePEc:tpr:restat:v:72:y:1990:i:4:p:649-56
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    Cited by:

    1. Margarita Genius & Spiro Stefanou & Vangelis Tzouvelekas, 2009. "Productivity Growth and Efficiency under Leontief Technology: An Application to US Steam-Electric Power Generation Utilities," Working Papers 0913, University of Crete, Department of Economics.
    2. Genius, Margarita & Stefanou, Spiro E. & Tzouvelekas, Vangelis, 2012. "Measuring productivity growth under factor non-substitution: An application to US steam-electric power generation utilities," European Journal of Operational Research, Elsevier, vol. 220(3), pages 844-852.
    3. Emre Berk & Onurcan Ayas & M. Ali Ülkü, 2023. "Optimizing Process-Improvement Efforts for Supply Chain Operations under Disruptions: New Structural Results," Sustainability, MDPI, vol. 15(17), pages 1-23, August.
    4. Patrik Söderholm, 2000. "Environmental Regulations and Interfuel Substitution in the Power Sector: A Generalized Leontief Model," Energy & Environment, , vol. 11(1), pages 1-23, January.
    5. Guohua Feng & Jiti Gao & Xiaohui Zhang, 2018. "Estimation of technical change and price elasticities: a categorical time–varying coefficient approach," Journal of Productivity Analysis, Springer, vol. 50(3), pages 117-138, December.
    6. Wilhelm Althammer & Erik Hille, 2016. "Measuring climate policy stringency: a shadow price approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 607-639, August.
    7. Yano, Takashi, 2018. "A global multi-sectoral model in local currencies," IDE Discussion Papers 703, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Kian, Ramez & Gürler, Ülkü & Berk, Emre, 2014. "The dynamic lot-sizing problem with convex economic production costs and setups," International Journal of Production Economics, Elsevier, vol. 155(C), pages 361-379.

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