Empirical tools to assess the sensitivity of directional distance functions to direction selection
AbstractDirectional Distance Functions (DDFs) are becoming a popular way of measuring efficiency as they encompass the Shephard output and input distance functions as special cases. However, the most critical and still unsolved issue related to DDF remains the selection of the direction along which to measure the distance from the efficient frontier. In this article, we propose some empirical tools which allow to quantify the sensitivity of the efficiency measurement to the selection of the direction. The proposed tools are applied on a dataset on the Italian agricultural sector.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 44 (2012)
Issue (Month): 8 (March)
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- Cinzia Daraio & Leopold Simar, 2014. "Efficiency and benchmarking with directional distances. A data driven approach," DIAG Technical Reports 2014-07, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
- Hampf, Benjamin & Krüger, Jens, 2013. "Optimal Directions for Directional Distance Functions: An Exploration of Potential Reductions of Greenhouse Gases," Darmstadt Discussion Papers in Economics 60952, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
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