A Note on Separability of the Profit Function - Theoretical Economics Letters

TEL > Vol.4 No.8, October 2014

A Note on Separability of the Profit Function ()

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DOI: 10.4236/tel.2014.48089 2,636 Downloads 3,328 Views

Author(s)

Rolf Färe^1,2, Giannis Karagiannis³

Affiliation(s)

¹Department of Economics, Oregon State University, Corvallis, OR, USA.
²Department of Agricultural & Resource Economics, Oregon State University, Corvallis, OR, USA.
³Department of Economics, University of Macedonia, Thessaloniki, Greece.

ABSTRACT

Based on the concept of translation elasticity we restate in this note the Fare and Grosskopf’s [1] conditions for additive separability of the profit function. We show that for the profit function to be additively separable, the technology must satisfy both simultaneous input-and-output translation homotheticity and graph translation homotheticity.

KEYWORDS

Separability, Profit Function, Directional Distance Function, Graph Translation Homotheticity, Simultaneous Input-and-Output Translation Homotheticity

Share and Cite:

Färe, R. and Karagiannis, G. (2014) A Note on Separability of the Profit Function. Theoretical Economics Letters, 4, 702-704. doi: 10.4236/tel.2014.48089.

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