In this paper, we consider the stochastic ray production function that has been revived recently by Henningsen et al. (2017). We use a profit-maximizing framework to resolve endogeneity problems that are likely to arise, as in all distance functions, and we derive the system of equations after...

In an in fluential paper Berger and Mester (1997) have proposed the alternative profi t function. It is widely thought that the alternative profi t function does not result in any useful duality properties. We show, in this study, that quite the opposite is true and, in fact, one can recover,...