Temporal Technical and Profit Efficiency Measurement: Definitions, Duality and Aggregation Results
AbstractThe shortage function, an important tool in production theory, measures potential increases in outputs and decreases in inputs for a given direction g at a given date. To develop a temporal version of technical efficiency measurement, we introduce the concept of a temporal shortage function. This temporal efficiency measure is easily computed using linear programming. We also establish a duality result stating that the temporal profit function and the temporal shortage function are dual to one another. This result has two consequences. First, one can derive a shadow price path via the shadow prices of the temporal shortage function. Second, transposing the classic Farrell inefficiency decomposition, temporal profit efficiency is decomposed into temporal technical and temporal allocative efficiency components. Finally, in line with the recent literature on aggregation over firms, this contribution treats the possibilities and limits of the aggregation of efficiency measures over time.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IESEG School of Management in its series Working Papers with number 2005-ECO-01.
Length: 26 pages
Date of creation: May 2005
Date of revision:
Publication status: Published in International Journal of Production Economics, September 2006, 103(1), pp. 48-63
Temporal shortage function; temporal profit function; aggregation over time;
Other versions of this item:
- Briec, Walter & Comes, Christine & Kerstens, Kristiaan, 2006. "Temporal technical and profit efficiency measurement: Definitions, duality and aggregation results," International Journal of Production Economics, Elsevier, vol. 103(1), pages 48-63, September.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
- Tulkens, Henry & Vanden Eeckaut, Philippe, 1995.
"Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects,"
European Journal of Operational Research,
Elsevier, vol. 80(3), pages 474-499, February.
- TULKENS, Henry & VANDEN EECKAUT, Philippe, 1993. "Non-Parametric Efficiency, Progress and Regress Measures for Panel Data : Methodological Aspects," CORE Discussion Papers 1993016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Tulkens, H. & Vanden Eeckaut, P., . "Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects," CORE Discussion Papers RP -1132, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
- Edward Jaenicke, 2000. "Testing for Intermediate Outputs in Dynamic DEA Models: Accounting for Soil Capital in Rotational Crop Production and Productivity Measures," Journal of Productivity Analysis, Springer, vol. 14(3), pages 247-266, November.
- Rolf Färe & Shawna Grosskopf, 2000. "Theory and Application of Directional Distance Functions," Journal of Productivity Analysis, Springer, vol. 13(2), pages 93-103, March.
- McFadden, Daniel, 1978. "Cost, Revenue, and Profit Functions," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 1 McMaster University Archive for the History of Economic Thought.
- Nishimizu, Mieko & Page, John M, Jr, 1982. "Total Factor Productivity Growth, Technological Progress and Technical Efficiency Change: Dimensions of Productivity Change in Yugoslavia, 1965-78," Economic Journal, Royal Economic Society, vol. 92(368), pages 920-36, December.
- Sengupta, Jati K., 1999. "A dynamic efficiency model using data envelopment analysis," International Journal of Production Economics, Elsevier, vol. 62(3), pages 209-218, September.
- Elvira Silva & Spiro Stefanou, 2003. "Nonparametric Dynamic Production Analysis and the Theory of Cost," Journal of Productivity Analysis, Springer, vol. 19(1), pages 5-32, January.
- Rolf Fare & Shawna Grosskopf & Valentin Zelenyuk, 2008. "Aggregation of Nerlovian profit indicator," Applied Economics Letters, Taylor & Francis Journals, vol. 15(11), pages 845-847.
- Walter Briec & Benoit Dervaux & Hervé Leleu, 2003. "Aggregation of Directional Distance Functions and Industrial Efficiency," Journal of Economics, Springer, vol. 79(3), pages 237-261, 07.
- Mahlberg, Bernhard & Sahoo, Biresh K., 2011. "Radial and non-radial decompositions of Luenberger productivity indicator with an illustrative application," International Journal of Production Economics, Elsevier, vol. 131(2), pages 721-726, June.
- Briec, Walter & Kerstens, Kristiaan, 2009. "Multi-horizon Markowitz portfolio performance appraisals: A general approach," Omega, Elsevier, vol. 37(1), pages 50-62, February.
- Leleu, Hervé & Briec, Walter, 2009. "A DEA estimation of a lower bound for firms' allocative efficiency without information on price data," International Journal of Production Economics, Elsevier, vol. 121(1), pages 203-211, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monika Marin).
If references are entirely missing, you can add them using this form.