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Decomposition of the Fisher Ideal Index of Productivity: A Non-parametric Dual Analysis of US Airlines Data

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  • Ray, Subhash C
  • Mukherjee, Kankana

Abstract

In this paper, the authors offer a nonparametric method of decomposing the Fisher ideal index of productivity into individual factors measuring technical efficiency change, allocative efficiency change, shift in the cost function, scale economies due to output change, and an adjustment factor reflecting change in the output attributes. Cross-section data from the U.S. airline industry for the years 1983 and 1984 are utilized in an empirical application illustrating this method. Copyright 1996 by Royal Economic Society.

Suggested Citation

  • Ray, Subhash C & Mukherjee, Kankana, 1996. "Decomposition of the Fisher Ideal Index of Productivity: A Non-parametric Dual Analysis of US Airlines Data," Economic Journal, Royal Economic Society, vol. 106(439), pages 1659-1678, November.
  • Handle: RePEc:ecj:econjl:v:106:y:1996:i:439:p:1659-78
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    Cited by:

    1. repec:eee:transe:v:104:y:2017:i:c:p:52-68 is not listed on IDEAS
    2. Mukherjee, Kankana & Ray, Subhash C. & Miller, Stephen M., 2001. "Productivity growth in large US commercial banks: The initial post-deregulation experience," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 913-939, May.
    3. Subhash C. Ray, 2005. "Shadow Profit Maximization and a Generalized Measure of Inefficiency," Working papers 2005-14, University of Connecticut, Department of Economics.
    4. repec:spr:joptap:v:141:y:2009:i:1:d:10.1007_s10957-008-9503-2 is not listed on IDEAS
    5. Chen, Wen-Chih & McGinnis, Leon F., 2007. "Reconciling ratio analysis and DEA as performance assessment tools," European Journal of Operational Research, Elsevier, vol. 178(1), pages 277-291, April.
    6. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2015. "Evaluating airline efficiency: An application of Virtual Frontier Network SBM," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 1-17.
    7. repec:eee:appene:v:199:y:2017:i:c:p:13-24 is not listed on IDEAS
    8. Li, Ye & Wang, Yan-zhang & Cui, Qiang, 2016. "Has airline efficiency affected by the inclusion of aviation into European Union Emission Trading Scheme? Evidences from 22 airlines during 2008–2012," Energy, Elsevier, vol. 96(C), pages 8-22.
    9. Fung, Michael K., 2006. "Scale economies, X-efficiency, and convergence of productivity among bank holding companies," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2857-2874, October.
    10. Mekaroonreung, Maethee & Johnson, Andrew L., 2014. "A nonparametric method to estimate a technical change effect on marginal abatement costs of U.S. coal power plants," Energy Economics, Elsevier, vol. 46(C), pages 45-55.
    11. David Lambert, 1998. "Productivity Measurement from a Reference Technology: A Distance Function Approach," Journal of Productivity Analysis, Springer, vol. 10(3), pages 289-304, November.
    12. Mallikarjun, Sreekanth, 2015. "Efficiency of US airlines: A strategic operating model," Journal of Air Transport Management, Elsevier, vol. 43(C), pages 46-56.
    13. C. O’Donnell, 2012. "An aggregate quantity framework for measuring and decomposing productivity change," Journal of Productivity Analysis, Springer, vol. 38(3), pages 255-272, December.
    14. Lordkipanidze, Nazibrola & Tauer, Loren W., 2000. "Farmer Efficiency and Technology Use with Age," Agricultural and Resource Economics Review, Cambridge University Press, vol. 29(01), pages 24-31, April.
    15. Fung, Michael K., 2006. "Are labor-saving technologies lowering employment in the banking industry?," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 179-198, January.
    16. E. Grifell-TatjeÌ & C. A. K. Lovell, 2015. "Decompositions of Profitability Change Using Cost Functions: A Comment," CEPA Working Papers Series WP032015, School of Economics, University of Queensland, Australia.
    17. Tim Coelli & Sergio Perelman & Elliot Romano, 1999. "Accounting for Environmental Influences in Stochastic Frontier Models: With Application to International Airlines," Journal of Productivity Analysis, Springer, vol. 11(3), pages 251-273, June.
    18. Lee, Chia-Yen & Johnson, Andrew L., 2012. "Two-dimensional efficiency decomposition to measure the demand effect in productivity analysis," European Journal of Operational Research, Elsevier, vol. 216(3), pages 584-593.
    19. Walter Briec & Kristiaan Kerstens, 2008. "Infeasibility and Directional Distance Functions with Application to the Determinateness of the Luenberger Productivity Indicator," Working Papers 2008-ECO-11, IESEG School of Management.
    20. repec:eee:transa:v:100:y:2017:i:c:p:121-134 is not listed on IDEAS
    21. Granderson, Gerald & Linvill, Carl, 1998. "Nonparametric measurement of productive efficiency in the presence of regulation," European Journal of Operational Research, Elsevier, vol. 110(3), pages 643-657, November.
    22. repec:eee:transa:v:106:y:2017:i:c:p:130-143 is not listed on IDEAS
    23. Timo Kuosmanen & Timo Sipiläinen, 2009. "Exact decomposition of the Fisher ideal total factor productivity index," Journal of Productivity Analysis, Springer, vol. 31(3), pages 137-150, June.
    24. Arnab K. Deb & Subhash C. Ray, 2013. "Economic Reforms and Total Factor Productivity Growth of Indian Manufacturing: An Inter-State Analysis," Working papers 2013-04, University of Connecticut, Department of Economics, revised Apr 2013.

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