Local versus Global Profit Maximization: The Case of Discrete Concave Production Functions
Somdeb Lahiri (lahiriifmr.ac.in)
Abstract: In this paper we show that for discrete concave functions, a local maximum need not be a global maximum. We also provide examples of discrete concave functions where this coincidence holds. As a direct consequence of this, we can establish the equivalence of local and global profit maximizers for an equivalent well-behaved production function that is generated by a (not necessarily discrete concave) production function.
Keywords: local maximum, global maximum, discrete concave, profit maximization
Category 1: Applications -- OR and Management Sciences (Finance and Economics )
Category 2: Combinatorial Optimization (Other )
Category 3: Global Optimization (Theory )
Citation: (mimeo)Institute for Financial Management & Research, August 2006.
Entry Submitted: 08/21/2006
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