Input price variation across locations and a generalized measure of cost efficiency
We propose a non-parametric model for global cost minimization as a framework for optimal allocation of a firm's output target across multiple locations, taking account of differences in input prices and technologies across locations. This should be useful for firms planning production sites within a country and for foreign direct investment decisions by multi-national firms. Two illustrative examples are included. The first example considers the production location decision of a manufacturing firm across a number of adjacent states within the US. In the other example, we consider the optimal allocation of US and Canadian automobile manufacturers across the two countries.
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- Subhash C. Ray & Kankana Mukherjee, 2000. "Decomposition of Cost Competitiveness in U.S. Manufacturing: Some State-by-State Comparisons," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 35(2), pages 133-153, July.
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1132, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- 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).
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- E. Grifell-Tatjé & C.A.K. Lovell, 2000. "Cost and productivity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 19-30.
- Fuss,Melvyn A. & Waverman,Leonard, 1992. "Costs and Productivity in Automobile Production," Cambridge Books, Cambridge University Press, number 9780521341417, October.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
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