Verifying Curvature of Profit and Cost/Expenditure Functions

Year: 
2017
Working Paper Number: 
WP 17-05
Abstract: 

Convexity or concavity of optimal value functions is sometimes checked by evaluating leading principal minors of the Hessian matrix. This practice is not justified by extant theorems
about semidefinite matrices. A theorem is presented that justifies the practice and provides a relatively easy method of proving the relationship between semidefiniteness and principal minors.

JEL Codes: 
C02
Authors: 
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