A NONPARAMETRIC ANALYSIS OF VARIABLE COST MINIMIZATION IN THE UNITED-STATES PAPER-INDUSTRY

Nonparametric tests of consistency of data with variable cost minimization, returns to scale, and homotheticity are described and applied to data from the US paper industry. Results indicate that data from the US paper industry are consistent with the minimization of variable costs, increased productivity due to technological improvements or increasing returns to scale, and a homothetic production function. A method derived from nonparametric estimation for screening hypothesized data sets prior to predictive use with an estimated production function is described. © 1990, Taylor & Francis Group, LLC. All rights reserved.