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Profit efficiency: Generalization, business accounting and the role of convexity

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  • Färe, Rolf
  • Zelenyuk, Valentin

Abstract

We present new theoretical results, showing that Nerlovian profit efficiency is a special case of the recently introduced general profit efficiency, deriving a new decomposition of profit efficiency, and outlining a simple way of estimating the generalized profit efficiency measure.

Suggested Citation

  • Färe, Rolf & Zelenyuk, Valentin, 2020. "Profit efficiency: Generalization, business accounting and the role of convexity," Economics Letters, Elsevier, vol. 196(C).
    • Handle: RePEc:eee:ecolet:v:196:y:2020:i:c:s0165176520302986
    DOI: 10.1016/j.econlet.2020.109483
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    References listed on IDEAS

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    9. Färe, Rolf & Zelenyuk, Valentin, 2019. "On Luenberger input, output and productivity indicators," Economics Letters, Elsevier, vol. 179(C), pages 72-74.
    10. Rolf Färe & Xinju He & Sungko Li & Valentin Zelenyuk, 2019. "A Unifying Framework for Farrell Profit Efficiency Measurement," Operations Research, INFORMS, vol. 67(1), pages 183-197, January.
    11. Dominique Deprins & Léopold Simar & Henry Tulkens, 2006. "Measuring Labor-Efficiency in Post Offices," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 285-309, Springer.
    12. Sickles,Robin C. & Zelenyuk,Valentin, 2019. "Measurement of Productivity and Efficiency," Cambridge Books, Cambridge University Press, number 9781107036161.
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    14. Zelenyuk, Valentin, 2020. "Aggregation of inputs and outputs prior to Data Envelopment Analysis under big data," European Journal of Operational Research, Elsevier, vol. 282(1), pages 172-187.
    15. Rolf Färe & Xinju He & Sungko Li & Valentin Zelenyuk, 2016. "A Unifying Framework for Farrell Efficiency Measurement Coherent with Profit-maximizing Principle," CEPA Working Papers Series WP052016, School of Economics, University of Queensland, Australia.
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    Cited by:

    1. Léopold Simar & Valentin Zelenyuk & Shirong Zhao, 2023. "Russell and Slack-Based Measures of Efficiency: A Unifying Framework," CEPA Working Papers Series WP092023, School of Economics, University of Queensland, Australia.
    2. Tsionas, Mike & Parmeter, Christopher F. & Zelenyuk, Valentin, 2023. "Bayesian Artificial Neural Networks for frontier efficiency analysis," Journal of Econometrics, Elsevier, vol. 236(2).
    3. Mike Tsionas & Valentin Zelenyuk, 2021. "Goodness-of-fit in Optimizing Models of Production: A Generalization with a Bayesian Perspective," CEPA Working Papers Series WP182021, School of Economics, University of Queensland, Australia.
    4. Jafar Hussain & Chien‐Chiang Lee, 2022. "A green path towards sustainable development: Optimal behavior of the duopoly game model with carbon neutrality instruments," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1523-1541, December.
    5. Valentin Zelenyuk, 2021. "Performance Analysis: Economic Foundations & Trends," CEPA Working Papers Series WP162021, School of Economics, University of Queensland, Australia.

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    More about this item

    Keywords

    Profit efficiency; Nerlovian efficiency;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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