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Reference technology sets, Free Disposal Hulls and productivity decompositions

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  • Diewert, W. Erwin
  • Fox, Kevin J.

Abstract

Diewert and Fox (2013) proposed decompositions of a Malmquist-type productivity index into explanatory factors, with a focus on extracting technical progress, technical efficiency change and returns to scale components. A major problem with their decompositions is that it may be difficult to determine the appropriate reference technologies. Using relatively unrestrictive regularity conditions, the paper develops a data envelopment type approach for decomposing productivity growth for a panel of production units into explanatory factors based on the Free Disposal Hull methods pioneered by Tulkens and his co-authors.

Suggested Citation

  • Diewert, W. Erwin & Fox, Kevin J., 2014. "Reference technology sets, Free Disposal Hulls and productivity decompositions," Economics Letters, Elsevier, vol. 122(2), pages 238-242.
  • Handle: RePEc:eee:ecolet:v:122:y:2014:i:2:p:238-242
    DOI: 10.1016/j.econlet.2013.11.026
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    References listed on IDEAS

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    1. Shawna Grosskopf, 2003. "Some Remarks on Productivity and its Decompositions," Journal of Productivity Analysis, Springer, vol. 20(3), pages 459-474, November.
    2. Cinzia Daraio & Léopold Simar, 2005. "Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach," Journal of Productivity Analysis, Springer, vol. 24(1), pages 93-121, September.
    3. Bjurek, Hans, 1996. " The Malmquist Total Factor Productivity Index," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 303-313, June.
    4. Tulkens, Henry & Vanden Eeckaut, Philippe, 1995. "Non-frontier measures of efficiency, progress and regress for time series data," International Journal of Production Economics, Elsevier, vol. 39(1-2), pages 83-97, April.
    5. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    6. 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.
    7. M. Ruth & K. Donaghy & P. Kirshen, 2006. "Introduction," Chapters,in: Regional Climate Change and Variability, chapter 1 Edward Elgar Publishing.
    8. R. Russell & William Schworm, 2009. "Axiomatic foundations of efficiency measurement on data-generated technologies," Journal of Productivity Analysis, Springer, vol. 31(2), pages 77-86, April.
    9. Diewert, Erwin & Fox, Kevin, 2013. "Decomposing Malmquist Productivity Indexes into Explanatory Factors," Economics working papers erwin_diewert-2013-39, Vancouver School of Economics, revised 18 Sep 2013.
    10. Charles C.L. Kwong & Wai Chung (Harry) Lo, 2006. "Guest Editors' Introduction," Chinese Economy, Taylor & Francis Journals, vol. 39(4), pages 3-9, August.
    11. Diewert, W E, 1980. "Capital and the Theory of Productivity Measurement," American Economic Review, American Economic Association, vol. 70(2), pages 260-267, May.
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    Citations

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    Cited by:

    1. W. Erwin Diewert & Kevin J. Fox, 2017. "Decomposing Value Added Growth into Explanatory Factors," Discussion Papers 2017-02, School of Economics, The University of New South Wales.
    2. Diewert, W. Erwin & Fox, Kevin J., 2017. "Decomposing productivity indexes into explanatory factors," European Journal of Operational Research, Elsevier, vol. 256(1), pages 275-291.
    3. Diewert, Erwin & Fox, Kevin J., 2014. "Decomposing Bjurek Productivity Indexes into Explanatory Factors," Economics working papers erwin_diewert-2014-32, Vancouver School of Economics, revised 30 Jun 2014.
    4. Ang, Frederic & Kerstens, Pieter Jan, 2017. "Decomposing the Luenberger–Hicks–Moorsteen Total Factor Productivity indicator: An application to U.S. agriculture," European Journal of Operational Research, Elsevier, vol. 260(1), pages 359-375.
    5. Diewert, W. Erwin & Fox, Kevin J., 2017. "The Difference Approach to Productivity Measurement and Exact Indicators," Microeconomics.ca working papers erwin_diewert-2017-10, Vancouver School of Economics, revised 24 Nov 2017.
    6. Tomas Balezentis & Zhiyang Shen, 2017. "An environmental Luenberger-Hicks-Moorsteen. Total Factor Productivityindicator for OECD Countries," Working Papers 2017-EQM-02, IESEG School of Management.
    7. Diewert, W. Erwin & Fox, Kevin J., 2016. "A Decomposition of U.S. Business Sector TFP Growth into Technical Progress and Cost Efficiency Components," Microeconomics.ca working papers erwin_diewert-2016-8, Vancouver School of Economics, revised 30 Jun 2016.
    8. Meryem Duygun & Silvia Pazzi & Emili Tortosa-Ausina & Simona Zambelli, 2014. "Does local public ownership matter for the efficiency of water utilities? Evidence from Italy," Working Papers 2014/21, Economics Department, Universitat Jaume I, Castellón (Spain).

    More about this item

    Keywords

    Productivity indexes; Free Disposal Hulls; Technical efficiency; Technical progress; Returns to scale; Distance functions;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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