A Production Function with an Inferior Input: Comment.

Epstein and Spiegel (2000) have discussed a production function in which one input is inferior: an increase in the target level of output reduces the quantity of the input demanded. This paper provides a more straightforward proof that the input in question is inferior. This proof has the added advantage that, unlike the proof of Epstein and Spiegel, it is based on the firm's cost minimization problem. It thus emphasizes the connection between the firm's cost minimization problem and the issue of input inferiority. It is also shown that, if we treat the Epstein-Spiegel functional form as a utility function rather than a production function, then the inferior good can exhibit Giffen behavior. Copyright 2001 by Blackwell Publishers Ltd and The Victoria University of Manchester