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Tangency Capacity Notions Based upon the Profit and Cost Functions: A Non-Parametric Approach and a General Comparison

Author

Listed:
  • Briec, Walter

    (University of Perpignan, F-66000 Perpignan, France)

  • Kerstens, Kristiaan

    (IESEG School of Management, F-59000 Lille, France)

  • Prior, Diego

    (Universitat Aut`onoma de Barcelona, E-08193 Bellaterra, Spain)

  • Van de Woestyne, Ignace

    (Hogeschool-Universiteit Brussel (HUB), Belgium)

Abstract

This contribution provides a way to define and compute a tangency notion of economic capacity based upon the relation between the various directional distance functions and the profit and cost functions using non-parametric technologies. A new result relating profit and cost function-based tangency capacity notions is established.

Suggested Citation

  • Briec, Walter & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2010. "Tangency Capacity Notions Based upon the Profit and Cost Functions: A Non-Parametric Approach and a General Comparison," Working Papers 2010/04, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    • Handle: RePEc:hub:wpecon:201004
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    References listed on IDEAS

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    Cited by:

    1. Giovanni Cesaroni & Kristiaan Kerstens & Ignace Van de Woestyne, 2017. "A New Input-Oriented Plant Capacity Notion: Definition and Empirical Comparison," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 720-739, October.
    2. Bruno De Borger & Kristiaan Kerstens & Diego Prior & Ignace Van de Woestyne, 2013. "Static efficiency decompositions and capacity utilization: integrating economic and technical capacity notions," Applied Economics, Taylor & Francis Journals, vol. 45(24), pages 3529-3529, August.
    3. De Borger, Bruno & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2009. "Static Efficiency Decompositions and Capacity Utilisation: Integrating Economic and Technical Capacity Notions. Technical Appendix," Working Papers 2009/31, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    4. Dale Squires & Kathleen Segerson, 2022. "Capacity and Capacity Utilization in Production Economics," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 24, pages 1001-1037, Springer.
    5. Kerstens, Kristiaan & Sadeghi, Jafar & Van de Woestyne, Ignace, 2019. "Convex and nonconvex input-oriented technical and economic capacity measures: An empirical comparison," European Journal of Operational Research, Elsevier, vol. 276(2), pages 699-709.

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    More about this item

    Keywords

    economic capacity; profit function; cost function; directional distance function; tangency;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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