Recovering Output‐Specific Inputs from Aggregate Input Data: A Generalized Cross‐Entropy Approach

16 Pages Posted: 27 Mar 2020

See all articles by Sergio H. Lence

Sergio H. Lence

Iowa State University - Department of Economics

Douglas J. Miller

Purdue University - Department of Agricultural Economics

Date Written: November 1998

Abstract

For multiproduct firms, data on aggregate input usage are typically available but data on activity‐specific inputs are not. The present study proposes a generalized cross‐entropy approach to estimate activity‐specific input allocations that are consistent with the aggregate information. The proposed method does not require behavioral assumptions (e.g., profit maximization) but does accommodate behavioral restrictions as well as nonsample information about the plausible factor shares across enterprises. Monte Carlo experiments using simulated data for multifactor‐multiproduct firms are used to evaluate the performance of the proposed method.

Keywords: aggregate input, generalized cross entropy, production, multifactor firm, multiproduct firm, D240, L230

Suggested Citation

Lence, Sergio H. and Miller, Douglas J., Recovering Output‐Specific Inputs from Aggregate Input Data: A Generalized Cross‐Entropy Approach (November 1998). American Journal of Agricultural Economics, Vol. 80, Issue 4, pp. 852-867, 1998, Available at SSRN: https://ssrn.com/abstract=3561806 or http://dx.doi.org/10.2307/1244069

Sergio H. Lence (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

Douglas J. Miller

Purdue University - Department of Agricultural Economics

West Lafayette, IN 47907-1145
United States

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