General Cost Structure Analysis Book

In light of the failure of traditional assumption of cost minimization as the main factor in predicting firm behavior, Sarkin (U. of Oxford) offers a quantitative analysis of cost structures with a minimum of a- priori assumptions on firm technology and firm behavior. He develops an alternative approach building on the primal rather than the dual characterization of the firm's shadow cost minimization program. The resulting Flexible Cost Model, he says, is highly conducive to modern panel data techniques and allows a flexible specification not only of firm technology but also of firm behavior because shadow prices can be specific to input, time, and firm. Annotation c. Book News, Inc., Portland, OR