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Profit efficiency: Generalization, business accounting and the role of convexity

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  • Färe, Rolf
  • Zelenyuk, Valentin

Abstract

We present new theoretical results, showing that Nerlovian profit efficiency is a special case of the recently introduced general profit efficiency, deriving a new decomposition of profit efficiency, and outlining a simple way of estimating the generalized profit efficiency measure.

Suggested Citation

  • Färe, Rolf & Zelenyuk, Valentin, 2020. "Profit efficiency: Generalization, business accounting and the role of convexity," Economics Letters, Elsevier, vol. 196(C).
    • Handle: RePEc:eee:ecolet:v:196:y:2020:i:c:s0165176520302986
    DOI: 10.1016/j.econlet.2020.109483
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    10. Rolf Färe & Xinju He & Sungko Li & Valentin Zelenyuk, 2019. "A Unifying Framework for Farrell Profit Efficiency Measurement," Operations Research, INFORMS, vol. 67(1), pages 183-197, January.
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    15. Rolf Färe & Xinju He & Sungko Li & Valentin Zelenyuk, 2016. "A Unifying Framework for Farrell Efficiency Measurement Coherent with Profit-maximizing Principle," CEPA Working Papers Series WP052016, School of Economics, University of Queensland, Australia.
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    Citations

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    Cited by:

    1. Tsionas, Mike & Parmeter, Christopher F. & Zelenyuk, Valentin, 2023. "Bayesian Artificial Neural Networks for frontier efficiency analysis," Journal of Econometrics, Elsevier, vol. 236(2).
    2. Jafar Hussain & Chien‐Chiang Lee, 2022. "A green path towards sustainable development: Optimal behavior of the duopoly game model with carbon neutrality instruments," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1523-1541, December.
    3. Zelenyuk, Valentin & Zhao, Shirong, 2024. "Russell and slack-based measures of efficiency: A unifying framework," European Journal of Operational Research, Elsevier, vol. 318(3), pages 867-876.
    4. Valentin Zelenyuk, 2021. "Performance Analysis: Economic Foundations & Trends," CEPA Working Papers Series WP162021, School of Economics, University of Queensland, Australia.
    5. Mahmood Mehdiloo & Jafar Sadeghi & Kristiaan Kerstens, 2024. "Top Down Axiomatic Modeling of Metatechnologies and Evaluating Directional Economic Efficiency," Working Papers 2024-EQM-03, IESEG School of Management.
    6. Mike Tsionas & Valentin Zelenyuk, 2021. "Goodness-of-fit in Optimizing Models of Production: A Generalization with a Bayesian Perspective," CEPA Working Papers Series WP182021, School of Economics, University of Queensland, Australia.

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    More about this item

    Keywords

    Profit efficiency; Nerlovian efficiency;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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