We define notions of well-definedness and observational equivalence for programs of mixed inductive and coinductive types. These notions are defined by means of tests formulas which combine structural congruence for inductive types and modal logic for coinductive types. Tests also correspond to certain evaluation contexts. We define a program to be well-defined if it is strongly normalizing under all tests, and two programs are observationally equivalent if they satisfy the same tests. We show that observational equivalence is sufficiently coarse to ensure that least and greatest fixed point types are initial algebras and final coalgebras, respectively. This yields inductive and coinductive proof principles for reasoning about program behaviour. On the other hand, we argue that observational equivalence does not identify too many terms, by showing that tests induce a topology that, on streams, coincides with usual topology induced by the prefix metric. As one would expect, observational equivalence is, in general, undecidable, but in order to develop some practically useful heuristics we provide coinductive techniques for establishing observational normalization and observational equivalence, along with up-to techniques for enhancing these methods.

We present a comparative study of four product operators on weighted languages: (i) the convolution, (ii) the shuffle, (iii) the infiltration and (iv) the Hadamard product. Exploiting the fact that the set of weighted languages is a final coalgebra, we use coinduction to prove that an operator of the classical difference calculus, the Newton transform, generalises from infinite sequences to weighted languages. We show that the Newton transform is an isomorphism of rings that transforms the Hadamard product of two weighted languages into their infiltration product, and we develop various representations for the Newton transform of a language, together with concrete calculation rules for computing them.