Cost functions are nonconvex in the outputs when the technology is nonconvex: convexification is not harmless

This contribution focuses on testing the empirical impact of convexity assumption in estimating costs using nonparametric specifications technology and cost functions. Apart from reviewing scant available evidence, results based two publicly data sets reveal effect axiom function estimates: estimates convex technologies turn out to be average between 21% 38% lower than those computed nonconvex technologies. These differences are statistically significant when comparing kernel densities can illustrated sections along some output dimension. Finally, also characterization returns scale economies production functions for individual units yields conflicting 19% 31% observations. The theoretical known potential as well these should make us reconsider analysis: clearly, is not harmless.