On the Econometric Estimation of the Distance Function Representation of a Production Technology.

Recent developments in the econometric estimation of multi-output, multi-inp ut distance functions have provided a promising new solution to the single-output restriction implicit in the standard production function. However, a suspicion that regressor endogeneity may introduce possible sim ultaneous equations bias has concerned some econometricians. In this paper we show that, under profit maximising behaviour, distance functions face no greater danger from such bias than their production function cousins.