ABSTRACT
Ever since Shephard's introduction of the 'duality theorem’ there have been many attempts to estimate production functions indirectly via cost minimising conditions in accounting and economics (see, inter alia, Uzawa (1964), Shephard (1970) and Bairam (1994)). The main point of taking such indirect routes to the production parameter estimation is that one utilizes other types of data (i.e. prices and costs) instead of, or in addition to, data on inputs and output. Unfortunately, it is rarely emphasised that one can relate the cost function's estimates to the parameters of the production function estimates if and only if one is willing to rely on often unrealistic assumptions concerning behaviour - such as cost minimisation under perfect competition.
