The objective of this course is to expose PhD level students to the foundations of modern production economics theory. Students will acquire skills and necessary knowledge to address and deal with production-related problems through the use of theoretical and/or analytical tools from the microeconomic theory of the firm. We will also illustrate how to apply these production theory related tools to empirical and practical cases related to firm’s production decision making processes.
The course focuses on the modern microeconomic theory of the firm based on the notion of the primal and dual representation of production technology. For the primal, we start with single output technologies and the production function and then we consider functional representation for multi-input and multi-output technologies such as transformation and input and output distance functions. For the dual, we consider the cost, revenue and profit functions. Then we proceed with indirect representations of technology, both primal and dual, which are particularly useful when production units face budget or sales constraints. Last but not least we consider the directional distance functions. In all these cases, we pay special attention to the theoretical properties of the underlying functions and we show how we can use them to analyze the structure of production by means of returns to scale, various forms of the elasticity of substitution, shadow prices and of course, comparative statics results. The last part of the course is devoted to the application of these theoretical tools to empirical analysis. In particular, we consider estimating a production function or a system of cost, revenue or profit functions equations by means econometric methods.
- Primal Representation of Production Technology
- Production Function
- Transformation Function
- Input Requirement Function
- Input and Output Distance Functions
- Dual Representation of Production Technology
- Cost Function
- Revenue Function
- Profit Function
- Indirect Primal and Dual Representation of Production Technology
- Indirect Production Function
- Indirect Input and Output Distance Functions
- Revenue and Cost Constrained Functions
- Directional Distance Functions
- Directional Input and Output Distance Functions
- Directional Technology Distance Function
- Applied Production Analysis
- Estimation of Cost and Profit Function System of Equations
- Estimation of Production Functions
After the course, registered students will get assignments including problem-solving exercises on production theory. This is intended to prepare the students for the take-home exam.
- An understanding of the foundations of modern production theory
- Knowledge about alternative primal and dual representations of production technology
- Knowledge of important modern concepts in the area of production economics
- Perform production analysis on real world data (estimation of cost and profit function system of equations and estimation of production functions)
- Analyze production decisions and performance achievements at both individual and aggregate level using real data
- Analyze the impact of policy changes in factor demand and output supply decisions
- Make performance assessment by means of estimating efficiency and productivity measures
- Give well-grounded advice based on modern production economy theory
To successfully complete the course students have to write a take-home exam that will be scheduled two weeks after the course.
The core of this course will be a set of lectures presenting and discussing the latest developments in production theory. The lectures will include diverse pedagogical tools, e.g. video presentations and real time analysis with student interaction. There will also be seminars with focus on specific production related topics during the course week. The assignments are designed with a focus on developing the students’ abilities to analyze real world data on production economy.
- Lectures: 30 hours
- Seminars/discussions: 10 hours
- Independent work: 30 hours
- Individual assignments: 15 hours
- Other: 5 hours take-home exam
M.Sc. or equivalent studies in economics, agricultural economics, farm management, and environmental economics. Undergraduate courses in microeconomic theory and calculus are required.
Admission for NOVA courses is handled by the course organiser/ the NOVA member institution organising the course. Please see the links in the margin for more information.
Please apply by sending your application by email to Ms Emma Arias Olsson, Department of Economics, SLU: ekon-adm[at]slu.se