Production with Storable and Durable Inputs: Nonparametric Analysis of Intertemporal Efficiency
We propose a nonparametric methodology for intertemporal production analysis that accounts for durable as well as storable inputs. Durable inputs contribute to the production outputs in multiple consecutive periods. Storable inputs are non-durable and can be stored in inventories for use in future periods. We explicitly model the possibility that firms use several vintages of the durable inputs, i.e. they invest in new durables and scrap older durables over time. Furthermore, we allow for production delays of durable inputs. We characterize production behavior that is dynamically cost efficient, which allows us to evaluate the efficiency of observed production decisions. For cost inefficient behavior, we propose a measure to quantify the degree of inefficiency. An attractive feature of this measure is that it can be decomposed in period-specfic cost inefficiencies. We demonstrate the usefulness of our methodology through an application to Swiss railway companies.
|Date of creation:||Sep 2016|
|Publication status:||Published by:|
|Contact details of provider:|| Postal: Av. F.D., Roosevelt, 39, 1050 Bruxelles|
Phone: (32 2) 650 30 75
Fax: (32 2) 650 44 75
Web page: http://difusion.ulb.ac.be
More information through EDIRC
References listed on IDEAS
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.:
- Crawford, Ian & Polisson, Matthew, 2014.
"Testing for intertemporal nonseparability,"
Journal of Mathematical Economics,
Elsevier, vol. 52(C), pages 46-49.
- Ian Crawford & Matthew Polisson, 2013. "Testing for Intertemporal Nonseparability," Discussion Papers in Economics 13/08, Department of Economics, University of Leicester, revised Jul 2013.
- Ian Crawford & Matthew Polisson, 2013. "Testing for intertemporal nonseparability," IFS Working Papers W13/19, Institute for Fiscal Studies.
- Charles Blackorby & R. Russell, 1999. "Aggregation of Efficiency Indices," Journal of Productivity Analysis, Springer, vol. 12(1), pages 5-20, August.
- Laurens Cherchye & Bram De Rock & Bart Dierynck & Filip Roodhooft & Jeroen Sabbe, 2013.
"Opening the “Black Box” of Efficiency Measurement: Input Allocation in Multioutput Settings,"
INFORMS, vol. 61(5), pages 1148-1165, October.
- Laurens CHERCHYE & Bram DE ROCK & Bart DIERYNCK & Filip ROODHOOFT & Jeroen SABBE, 2011. "Opening the 'black box' of efficiency measurement: input allocation in multi-output settings," Working Papers Department of Economics ces11.10, KU Leuven, Faculty of Economics and Business, Department of Economics.
- Laurens Cherchye & Bram De Rock & Bart Dierynck & Filip Roodhooft & Jeroen Sabbe, 2013. "Opening the Black Box of Efficiency Measurement: Input Allocation in Multi-Output Settings," ULB Institutional Repository 2013/151675, ULB -- Universite Libre de Bruxelles.
- Cherchye, L. & De Rock, B. & Dierynck, B. & Roodhooft, F. & Sabbe, J., 2011. "Opening the ‘Black box’ of efficiency measurement: Input allocation in Multi-output settings," Vlerick Leuven Gent Management School Working Paper Series 2011-13, Vlerick Leuven Gent Management School.
- Maniadakis, Nikolaos & Thanassoulis, Emmanuel, 2004. "A cost Malmquist productivity index," European Journal of Operational Research, Elsevier, vol. 154(2), pages 396-409, April.
- 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.
- Sebastian Nick & Heike Wetzel, 2016.
"The hidden cost of investment: the impact of adjustment costs on firm performance measurement and regulation,"
Journal of Regulatory Economics,
Springer, vol. 49(1), pages 33-55, February.
- Sebastian Nick & Heike Wetzel, 2016. "The hidden cost of investment: the impact of adjustment costs on firm performance measurement and regulation," Journal of Regulatory Economics, Springer, vol. 49(1), pages 33-55, February.
- Nick, Sebastian & Wetzel , Heike, 2014. "The Hidden Cost of Investment: The Impact of Adjustment Cost on Firm Performance Measurement and Regulation," EWI Working Papers 2014-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
- Fare, R. & Grabowski, R. & Grosskopf, S. & Kraft, S., 1997. "Efficiency of a fixed but allocatable input: A non-parametric approach," Economics Letters, Elsevier, vol. 56(2), pages 187-193, October.
- Haney, A.B. & Pollitt, M.G., 2012. "International benchmarking of Electricity Transmission by Regulators: Theory and Practice," Cambridge Working Papers in Economics 1254, Faculty of Economics, University of Cambridge.
- Mehdi Farsi & Massimo Filippini & William Greene, 2005.
"Efficiency Measurement in Network Industries: Application to the Swiss Railway Companies,"
Journal of Regulatory Economics,
Springer, vol. 28(1), pages 69-90, July.
- Mehdi Farsi & Massimo Filippini & William Greene, 2004. "Efficiency Measurement in Network Industries: Application to the Swiss Railway Companies," CEPE Working paper series 04-32, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Haney, Aoife Brophy & Pollitt, Michael G., 2013. "International benchmarking of electricity transmission by regulators: A contrast between theory and practice?," Energy Policy, Elsevier, vol. 62(C), pages 267-281.
- Fare, Rolf & Zelenyuk, Valentin, 2003. "On aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 146(3), pages 615-620, May.
- Nemoto, Jiro & Goto, Mika, 1999. "Dynamic data envelopment analysis: modeling intertemporal behavior of a firm in the presence of productive inefficiencies," Economics Letters, Elsevier, vol. 64(1), pages 51-56, July.
- Pollitt, Michael, 2005. "The role of efficiency estimates in regulatory price reviews: Ofgem's approach to benchmarking electricity networks," Utilities Policy, Elsevier, vol. 13(4), pages 279-288, December.
- Steven T. Hackman & Robert C. Leachman, 1989. "A General Framework for Modeling Production," Management Science, INFORMS, vol. 35(4), pages 478-495, April.
When requesting a correction, please mention this item's handle: RePEc:eca:wpaper:2013/235997. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.