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Measuring firm performance: Bayesian estimates with good and bad outputs

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  • Assaf, A. George
  • Josiassen, Alexander
  • Gillen, David

Abstract

Set in the airport industry, this paper measures firm performance using both desirable and bad outputs (i.e. airport delays). We first estimate a model that does not include the bad outputs and then a model that includes bad outputs. The results show important differences in the efficiency and productivity results depending on whether bad outputs are or are not included in the model. The differences reflect the resource cost to society and the potential cost to an airport if such externalities were internalized. Finally, the paper provides measures of shadow prices for the bad output, in our case airport delay, and discusses the results in terms of several interesting trends affecting US airports.

Suggested Citation

  • Assaf, A. George & Josiassen, Alexander & Gillen, David, 2014. "Measuring firm performance: Bayesian estimates with good and bad outputs," Journal of Business Research, Elsevier, vol. 67(6), pages 1249-1256.
    • Handle: RePEc:eee:jbrese:v:67:y:2014:i:6:p:1249-1256
    DOI: 10.1016/j.jbusres.2013.04.005
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    Cited by:

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    3. Smith, Andrew S.J. & Ojeda Cabral, Manuel, 2022. "Is higher quality always costly? Marginal costs of quality: Theory and application to railway punctuality," Transportation Research Part A: Policy and Practice, Elsevier, vol. 157(C), pages 258-273.
    4. Merkert, Rico & Assaf, A. George, 2015. "Using DEA models to jointly estimate service quality perception and profitability – Evidence from international airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 75(C), pages 42-50.
    5. Tsionas, Mike G. & Chen, Zhongfei & Wanke, Peter, 2017. "A structural vector autoregressive model of technical efficiency and delays with an application to Chinese airlines," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 1-10.
    6. Link, Heike, 2019. "The impact of including service quality into efficiency analysis: The case of franchising regional rail passenger serves in Germany," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 284-300.
    7. Bezerra, George C.L. & Gomes, Carlos F., 2018. "Performance measurement practices in airports: Multidimensionality and utilization patterns," Journal of Air Transport Management, Elsevier, vol. 70(C), pages 113-125.
    8. Sami Ben Jabeur & Rabi Belhaj Hassine & Salma Mefteh‐Wali, 2021. "Firm financial performance during the financial crisis: A French case study," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2800-2812, April.
    9. Louhichi, Awatef & Boujelbene, Younes, 2020. "Credit risk pricing and the rationality of lending decision-making within dual banking systems: A parametric approach," Economic Systems, Elsevier, vol. 44(1).

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