Impacts of alternative specifications for heteroscedastic error structures are examined
estimating various production functions for corn in Central Texas. Production- and
levels of inputs and the shape of the profit equation obtained from models not corrected
for heteroscedasticity differed from those obtained from models corrected for heteroscedasticity.
Using the profit-maximizing input levels for each production function gave essentially
estimated yield and profit, regardless of the specification for heteroscedasticity
Differences of up to one-quarter to one-third are noted, however, in the amount of
levels of inputs used, depending on the heteroscedasticity correction.