rankReduction: an integer specifying the reduction of the rank of the β matrix.
start: starting values of the triangular Cholesky matrix.
optimMethod: method to be used by optim.
control: list of control parameters passed to optim.
stErMethod: method to compute standard errors, either 'none', 'resample', 'jackknife' or 'coefSim' (see details).
nRep: number of replications to compute the standard errors if stErMethod is either 'resample' or 'coefSim'.
verbose: an integer idicating the verbose level.
Details
The procedure proposed by Koebel, Falk and Laisney (2000, 2003) is applied to impose convexity in prices on an estimated symmetric normalized quadratic (SNQ) profit function.
The standard errors of the restricted coefficients can be either calculated by bootstrap resampling ('resampling'), jackknife ('jacknife') or by simulating the distribution of the unrestricted coefficients using its variance covariance matrix ('coefSim').
Returns
a list of class snqProfitImposeConvexity containing the same objects as an object of class snqProfitEst
and additionally the objects: - mindist: object returned by optim.
sim: results of the simulation to obtain the standard errors of the estimated coefficients.
References
Koebel, B., M. Falk and F. Laisney (2000), Imposing and Testing Curvature Conditions on a Box-Cox Cost Function. Discussion Paper No. 00-70, ZEW, Mannheim, https://madoc.bib.uni-mannheim.de/515/1/dp0070.pdf.
Koebel, B., M. Falk and F. Laisney (2003), Imposing and Testing Curvature Conditions on a Box-Cox Cost Function. Journal of Business and Economic Statistics, 21, p. 319-335.
See Also
snqProfitEst.
Author(s)
Arne Henningsen
Examples
if( requireNamespace('micEcon', quietly =TRUE)){ data( germanFarms, package ="micEcon") germanFarms$qOutput <- germanFarms$vOutput / germanFarms$pOutput
germanFarms$qVarInput <--germanFarms$vVarInput / germanFarms$pVarInput
germanFarms$qLabor <--germanFarms$qLabor
priceNames <- c("pOutput","pVarInput","pLabor") quantNames <- c("qOutput","qVarInput","qLabor") estResult <- snqProfitEst( priceNames, quantNames,"land", data = germanFarms ) estResult # Note: it is NOT convex in netput prices estResultConvex <- snqProfitImposeConvexity( estResult ) estResultConvex # now it is convex}