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Generalized quadratic revenue functions

Author

Listed:
  • R. Chambers
  • R. Fare
  • S. Grosskopf
  • M. Vardanyan

    (UMR CNRS 8179 - CNRS - Centre National de la Recherche Scientifique - Université de Lille, Sciences et Technologies)

Abstract

In this paper we focus on the specification of revenue functions in their dual price space. We consider two distance functions–the Shephard output distance function and the directional output distance function–and define both in price space. The former is multiplicative in nature and satisfies homogeneity, whereas the latter is additive and satisfies the translation property. Functional equation methods yield the translog specification in the case of the Shephard distance function and a quadratic specification in the case of the directional distance function. Monte Carlo evidence suggests that the quadratic specification outperforms the translog in large samples and in true models with plenty of curvature.
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Suggested Citation

  • R. Chambers & R. Fare & S. Grosskopf & M. Vardanyan, 2013. "Generalized quadratic revenue functions," Post-Print hal-00840152, HAL.
  • Handle: RePEc:hal:journl:hal-00840152
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00840152
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    Cited by:

    1. Kutlu, Levent & Liu, Shasha & Sickles, Robin C., 2018. "Cost, Revenue, and Profit Function Estimates," Working Papers 18-006, Rice University, Department of Economics.
    2. Scott E. Atkinson & Kamalini Ramdas & Jonathan W. Williams, 2016. "Robust Scheduling Practices in the U.S. Airline Industry: Costs, Returns, and Inefficiencies," Management Science, INFORMS, vol. 62(11), pages 3372-3391, November.
    3. Neves, Mateus C R & Silva, Felipe & Freitas, Carlos Otávio & Braga, Marcelo J., 2017. "The impact of Cooperative Membership on farm income," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259196, Agricultural and Applied Economics Association.
    4. Gary D. Ferrier & Hervé Leleu & Vivian G. Valdmanis & Michael Vardanyan, 2018. "A directional distance function approach for identifying the input/output status of medical residents," Applied Economics, Taylor & Francis Journals, vol. 50(9), pages 1006-1021, February.
    5. repec:spr:comaot:v:24:y:2018:i:3:d:10.1007_s10588-017-9257-1 is not listed on IDEAS
    6. repec:eee:ejores:v:262:y:2017:i:1:p:361-369 is not listed on IDEAS
    7. repec:kap:enreec:v:70:y:2018:i:1:d:10.1007_s10640-017-0117-8 is not listed on IDEAS
    8. Rolf Färe & Michael Vardanyan, 2016. "A note on parameterizing input distance functions: does the choice of a functional form matter?," Journal of Productivity Analysis, Springer, vol. 45(2), pages 121-130, April.
    9. Färe, Rolf & Pasurka, Carl & Vardanyan, Michael, 2017. "On endogenizing direction vectors in parametric directional distance function-based models," European Journal of Operational Research, Elsevier, vol. 262(1), pages 361-369.
    10. Mateus De Carvalho Reis Neves & Mateus De Carvalho Reis Neves & Felipe De Figueiredo Silva & Carlos Otávio Freitas & Marcelo José Braga, 2018. "The Shadow Price Of Cooperative Membership On Agriculture In The Brazilian South And Southeast Regions," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 191, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Carlos Otávio De Freitas & Felipe De Figueiredo Silva & Mateus De Carvalho Reis Neves & Marcelo José Braga, 2018. "Technical Assistance Support Effect On Brazilian Agricultural Performance," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 188, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    12. Czekaj, Tomasz G., 2015. "Measuring the Technical Efficiency of Farms Producing Environmental Output: Semiparametric Estimation of Multi-output Stochastic Ray Production Frontiers," 2015 Conference, August 9-14, 2015, Milan, Italy 211555, International Association of Agricultural Economists.
    13. Tomasz Gerard Czekaj, 2013. "Measuring the Technical Efficiency of Farms Producing Environmental Output: Parametric and Semiparametric Estimation of Multi-output Stochastic Ray Production Frontiers," IFRO Working Paper 2013/21, University of Copenhagen, Department of Food and Resource Economics.

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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