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Specification and Estimation of Nonseparable Two-Stage Technologies: The Leontief CES and the Cobb-Douglas CES

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  • Pollak, Robert A
  • Wales, Terence J

Abstract

A two-stage technology is a sequential production process that first uses pri mary inputs to produce intermediate inputs and then uses theintermediate inputs to produce final output. In this paper the authors show that two-stage technologies provide a general procedure for combining production functions or cost functions to obtain new specifications suitable for empirical production analysis. They investigate two new cost functions for which the input demand systemssatisfy global regularity conditions in a wide range of nondegenerate cases. Using six data sets, the authors estimate thesetwo input demand systems, both with and without imposing global regularity conditions, and find that one of them performs well. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Pollak, Robert A & Wales, Terence J, 1987. "Specification and Estimation of Nonseparable Two-Stage Technologies: The Leontief CES and the Cobb-Douglas CES," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 311-333, April.
    • Handle: RePEc:ucp:jpolec:v:95:y:1987:i:2:p:311-33
    DOI: 10.1086/261457
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    Cited by:

    1. Stefan Boeters & Michael Feil, 2009. "Heterogeneous Labour Markets in a Microsimulation–AGE Model: Application to Welfare Reform in Germany," Computational Economics, Springer;Society for Computational Economics, vol. 33(4), pages 305-335, May.
    2. James J. Heckman, 2015. "Introduction to A Theory of the Allocation of Time by Gary Becker," Economic Journal, Royal Economic Society, vol. 0(583), pages 403-409, March.
    3. Konrad Menzel, 2021. "Structural Sieves," Papers 2112.01377, arXiv.org, revised Apr 2022.
    4. Perroni, Carlo & Rutherford, Thomas F., 1995. "Regular flexibility of nested CES functions," European Economic Review, Elsevier, vol. 39(2), pages 335-343, February.
    5. Han, Han Soo, 1990. "The theoretical input-output system with flexible technological coefficients based on the two-stage level CES-type production function," ISU General Staff Papers 1990010108000010500, Iowa State University, Department of Economics.
    6. Hoehn, John P., 1989. "The Production of Natural Resource Services: An Analysis of Supply-Side Economic Benefits and Costs," Staff Paper Series 201029, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    7. Rendleman, C. Matthew, 1993. "Estimation of Aggregate U.S. Demands for Fertilizer, Pesticides, and Other Inputs: A Model for Policy Analysis," Technical Bulletins 157035, United States Department of Agriculture, Economic Research Service.
    8. James Kirkley & Catherine Morrison Paul & Stephen Cunningham & Joseph Catanzano, 2004. "Embodied and Disembodied Technical Change in Fisheries: An Analysis of the Sète Trawl Fishery, 1985–1999," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 191-217, October.
    9. Mekhora, Thamrong, 1999. "Econometric analysis on economies of scale: An application to rice and shrimp production in Thailand," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 124086, Australian Agricultural and Resource Economics Society.
    10. Alexandre Gohin, 2006. "The specification of price and income elasticities in computable general equilibrium models : an application of latent separability," Working Papers hal-01931657, HAL.
    11. James Kirkley & Dale Squires & Ivar Strand, 1998. "Characterizing Managerial Skill and Technical Efficiency in a Fishery," Journal of Productivity Analysis, Springer, vol. 9(2), pages 145-160, March.
    12. Acar, Mustafa & Alpay, Savaş & Bakimli, Esat & Koc, Zehra Zümrüt, 2008. "South – East Asian Integration in the Context of OIC: Implications of Free Trade Among Malaysia, Indonesia and Bangladesh," Conference papers 331755, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Kirkley, James E. & Morrison Paul, Catherine J. & Cunningham, Stephen & Catanzano, Joseph, 2001. "Technical Progress In The Sete Trawl Fishery, 1985-1999," Working Papers 11980, University of California, Davis, Department of Agricultural and Resource Economics.
    14. Aradhyula, Satheesh Venkata, 1989. "Policy structure, output supply and input demand for US crops," ISU General Staff Papers 198901010800009909, Iowa State University, Department of Economics.
    15. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1645-1718, Elsevier.

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