Calibration of cost functions for individual firms as an alternative to estimation: an application to New Brunswick peat-mining firms

A method for calibrating the total annual cost function of a single firm is developed by using optimal control and assuming rational behavior of the f irm. The method is applied to peat-harvesting firms in New Brunswick, but h as wider applicability. Information on the exogenous variables is available without resorting to surveys of individual firms, leaving as endogenous th e variables specific to a firm. The results are sufficiently promising that the approach suggested herein may serve as a useful set of parameters for individual firms in follow-up work.