Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jul, 1950, Volume 18, Issue 3

Empirical Determination of a Multidimensional Marginal Cost Function<217:EDOAMM>2.0.CO;2-L
p. 217-235

A. R. Ferguson

An empirical cost function for fuel consumption in air transportation is obtained from a consideration of the engineering determinants of the relationship between physical inputs and physical outputs. The accuracy of fuel consumption estimates so obtained is considered in the light of operating data for Northeast Airlines. Marginal cost functions are derived which facilitate theanalysis of the impact upon cost, not only of changes in output and factor prices, but also of changes in quality of the product and the techniques of production. The advantages and limitations of the approach are indicated.

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