Mixed partial elasticities in constant returns‐to‐scale production technologies

Mixed partial elasticities in constant returns‐to‐scale production technologies

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Article ID: iaor20122437
Volume: 220
Issue: 1
Start Page Number: 262
End Page Number: 269
Publication Date: Jul 2012
Journal: European Journal of Operational Research
Authors: ,
Keywords: programming: linear, combinatorial optimization
Abstract:

Recently, developed a linear programming approach to the analysis and calculation of a class of mixed partial elasticity measures in variable returns‐to‐scale (VRS) production technologies. In the current paper, we extend their approach to the constant returns‐to‐scale (CRS) technologies and formulate linear programs required for the computation of elasticity measures. Among other results obtained in this paper, we prove a new result, valid in both VRS and CRS technologies, that allows us to identify the reason why the corresponding elasticity measure is undefined at the unit. This removes the need for a preliminary sorting of the units into those units where the elasticity measure applies and those where it does not.

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