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| Lee, Lung-Fei; Pitt, Mark M.. |
| The specification and estimation of models of consumer and producer demand with kink points are considered. The presence of kink points divides the demand or production schedule into different regimes. Our approach utilizes the concept of virtual prices. The virtual prices transform binding quantities into nonbinding ones and provide a rigorous justification for structural change in the observed demand functions across regimes. The comparison of virtual prices with market prices determines regime occurences. An application to energy demand in Indonesian manufacturing firms based on the translog cost function is provided. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Demand and Price Analysis. |
| Ano: 1984 |
URL: http://purl.umn.edu/7495 |
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| Lee, Lung-Fei; Pitt, Mark M.. |
| This paper provides a theoretically consistent approach to estimating demand relationships in which kink points occur either in the interior or on the vertices of the budget set. There are important classes of problems in developing countries which demonstrate such kinked budget sets including binding non-negativity constraints. This paper also extends these methods to the estimation of production structures. As an application a translog cost function for three energy inputs is estimated from cross-sections of individual Indonesian firms. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Political Economy. |
| Ano: 1987 |
URL: http://purl.umn.edu/7470 |
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