Analysis of Wheat Cost Function; Using Trans-log Cost Function (one Output), Case Study:Arasbaran Area

The purpose of this research is analysis of the mathematical structure of production and cost function for wheat. Methodology of this research is based on duality theory, where the theory indicates behavior production and the cost function similarities. In this study, for parameters estimation such as: elasticity of production, production coefficient and return to scale, trans-log cost function is chosen, that is a robust framework to analysis the production relations instead of production function. In this approach, we can avoid some of the restrictions such as: homogeneous production function and nonlinearity of inputs. For estimation of the input demands and increasing efficiency of model, a system of equations and seemingly unrelated regressions is used instead of single equation estimation. Data for research is obtained summarizing by information about hundred wheat producers in the area of arasbaran. Where the coefficient of determination model is ninety percent showing goodness of fit. The results of the fitting model indicates chemistry fertilizer- seed and machinery - labors are complementary. The complementary between labor and machinery, may lead us to mechanization policy and increasing of employment, this could be done by banking loan. Results also show that the quantity of morishima elasticity of substitution and elasticity factor ratio, labor – fertilizer and seed- machinery services greater than one. Thus, there exists a robust substitution relationship between them.Hypothesis of production homothetic, return to scale, unit elasticity of substitution, and Cobb-Douglas function are rejected by likelihood ratio test (LR).