ABSTRACT
Two major advances dominate the production economics literature in the last quarter of a century. These are the dual forms of the production relation such as the cost and profit functions, and the discovery of flexible functional forms which can be viewed as second order approximations of any unknown production function. Thus in an ideal world, the appropriate procedure to follow in applications such as a firm or sector level measure of efficiency would be to fit a profit function version of one of the latest flexible functional forms. This chapter outlines the models available. But perhaps more importantly it explains why neither of these developments have proved more than marginally useful when analysing transition economies, and using accounting data.
