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Dynamic Efficiency Measurement: A Directional Distance Function Approach


  • Elvira Silva

    () (Faculdade de Economia do Porto, cef.up, University of Porto)

  • Alfons Oude Lansink

    () (Department of Social Sciences, Wageningen University)


A dynamic directional input distance function is proposed within the adjustment-cost model of the firm, generalizing the directional distance function developed by Chambers, Chung and Färe (1996) in the static context. Duality is established between the dynamic directional distance function and the optimal current value function of the intertemporal cost minimization problem. Dynamic input efficiency measures are generated from the dynamic directional input distance function and intertemporal duality. These efficiency measures indicate the firm’s degree of efficiency at a point along its adjustment path. The dynamic efficiency measures are illustrated on panel data of Dutch glasshouse horticulture firms using a nonparametric approach. Keywords and Phrases: adjustment-cost technology, dynamic directional input distance function, dynamic duality, dynamic cost efficiency.

Suggested Citation

  • Elvira Silva & Alfons Oude Lansink, 2013. "Dynamic Efficiency Measurement: A Directional Distance Function Approach," CEF.UP Working Papers 1307, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:cetedp:1307

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    References listed on IDEAS

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    Cited by:

    1. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro E., 2014. "Assessing dynamic inefficiency of the Spanish construction sector pre- and post-financial crisis," European Journal of Operational Research, Elsevier, vol. 237(1), pages 349-357.
    2. Kapelko, M. & Horta, I.M. & Camanho, A.S. & Oude Lansink, A., 2015. "Measurement of input-specific productivity growth with an application to the construction industry in Spain and Portugal," International Journal of Production Economics, Elsevier, vol. 166(C), pages 64-71.
    3. Ang, Frederic & Oude Lansink, Alfons, 2014. "Dynamic profit inefficiency: a DEA application to Belgian dairy farms," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182649, European Association of Agricultural Economists.
    4. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro E., 2015. "Analyzing the impact of investment spikes on dynamic productivity growth," Omega, Elsevier, vol. 54(C), pages 116-124.

    More about this item


    adjustment-cost technology; dynamic directional input distance function; dynamic duality; dynamic cost efficiency;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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