There has been growing interest in the use of duality principles to estimate indirectly both the character of the production technology in various industries and the structure of preferences. Much of this material has to date, remained outside most intermediate micro-theory texts. The purpose of this paper is to provide a heuristic discussion of these relations as they are used in evaluating the micro-level production technology. The duality properties are illustrated using a neoclassical cost function and recent empirical examples for the issue of economies of scale in electric power production and the role of natural resources for production at the two-digit (SIC code) level of manufacturing.
ASJC Scopus subject areas
- Geography, Planning and Development
- Economics and Econometrics
- Strategy and Management
- Statistics, Probability and Uncertainty
- Management Science and Operations Research