“…In particular, we assume that the effects of technical change (t) on the production level y are purely factoraugmenting; that is, affecting each factor through a factor specific efficiency index, e i ¼ e i ðt; yÞ-factor augmenting technical change was pioneered by Kohli (1981Kohli ( , 1982Kohli ( , 1991Kohli ( , 1993. Thomsen (2000) shows generally that in order to obtain a total cost function with technical change and returns to scale, Cðp; y; tÞ, one can first figure out the stripped-down cost function denoted by C Ã ðp; yÞ, and then divide p in C Ã ðp; yÞ by a factor specific efficiency index. Thomsen (2000) further shows that the efficiency index is capable of rendering any stripped-down cost function flexible in y and t. Under the assumption of constant returns to scale we specify the efficiency index as 2…”