Special Production Structures
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In this chapter we impose two sets of constraints on the technology, namely a piecewise linear form and a set of scaling law constraints. Many production technologies can be conceptualized as the interaction of a finite number of production sub-technologies called activities. In Section 4.1 we develop the activity analysis structure, starting with a piecewise linear model that satisfies constant returns to scale and strong disposability of inputs and outputs. This structure is then generalized to allow for variable returns to scale and weak but not necessarily strong input and output disposability.
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