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Profit maximization and supermodular technology.
- Source :
- Economic Theory; Aug2009, Vol. 40 Issue 2, p173-183, 11p
- Publication Year :
- 2009
-
Abstract
- A dataset is a list of observed factor inputs and prices for a technology; profits and production levels are unobserved. We obtain necessary and sufficient conditions for a dataset to be consistent with profit maximization under a monotone and concave revenue based on the notion of cyclic monotonicity. Our result implies that monotonicity and concavity cannot be tested, and that one cannot decide if a firm is competitive based on factor demands. We also introduce a condition, cyclic supermodularity, which is both necessary and sufficient for data to be consistent with a supermodular technology. Cyclic supermodularity provides a test for complementarity of production factors. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 09382259
- Volume :
- 40
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- Economic Theory
- Publication Type :
- Academic Journal
- Accession number :
- 40830043
- Full Text :
- https://doi.org/10.1007/s00199-008-0340-1