A New Empirical Output Allocation Model for the Competitive Multiproduct Firm* James L. Seale Jr., 1 Gulcan Onel 1 and Manhong Zhu 1 In this paper, based on Laitinen and Theil’s (1978) theoretical model, we for- mulate an empirical output allocation model illustrating supply decisions of a profit-maximising multiproduct firm. While theoretically elegant, Laitinen and Theil’s (1978) output allocation model has never been formulated empir- ically in its general form due to the complexity of its nonlinear price deflator indexes. We close this gap in the literature by mathematically deriving the empirically tractable counterpart of the output allocation model. Our model does not rely on restrictions such as input–output separability or output inde- pendence, and it can easily be implemented by practitioners using standard econometric methods. We empirically illustrate the model using data con- structed based on different production and cost functions. Keywords: multiproduct firm, output allocation, joint production, input– output separability, output dependence. 1. Introduction Employing the differential approach, Laitinen and Theil (1978) derive a theoretical output allocation model for the multiproduct firm that maximises profits for given input and output prices. In its gen- eral form, the model allows for joint production of multiple outputs by a single firm, and the output allocation decision is determined by changes in total output, output prices and input prices. However, the empirically estimable counterpart of the unrestricted general output allocation model has proven difficult to formulate because of the complex nonlinear terms in the model. There are a few empirical studies that extend the differential approach to output allocation deci- sions of the multiproduct firm. Clements (1980) derives what he calls an aggregative multiproduct supply model under the restriction of input–output separability such that output allocation is inde- pendent of changes in input prices. Clements and Izan (1982) further extend this model by imposing output independence, that is, non-joint production meaning the multiproduct firm that produces m products may be treated as m single-product firms (Laitinen & Theil, 1978). Rossi (1984) derives an empirical product supply and input demand system that includes two equations for output allocation, one for groups of goods and the other for goods within the group. To do so, Rossi (1984) imposes out- put independence among the groups of goods and imposes homotheticity in inputs for the firm. In this paper, a linear parameterisation of Laitinen and Theil’s (1978) output allocation model for the profit-maximising multiproduct firm is derived in general form, and, based on the linearisation, a *There are no funding sources or conflicts of interest to acknowledge as pertain to this manuscript. An earlier version of this paper was presented at the 2015 Agricultural & Applied Economics Association (AAEA) annual conference in San Francisco, California, USA. 1 Food and Resource Economics Department, University of Florida, Gainesville, FL, USA. JEL classifications: D2, D4, L1, L2 Correspondence: James L. Seale Jr., Food and Resource Economics Department, University of Florida, P.O. Box 110240 MCCB Gainesville, FL 32611-0240, USA. Email: jseale@ufl.edu ECONOMIC PAPERS, VOL. 35, NO. 4, DECEMBER 2016, 403–410 403 Ó 2016 The Economic Society of Australia doi: 10.1111/1759-3441.12150