Profit Efficiency Analysis Under Limited Information. With an Application to German Farm Types
Lack of information about technology and prices often hampers the empirical assessment of the validity of the profit maximization hypothesis. We show that the non-parametric Data Envelopment Analysis (DEA) methodology comprises natural tools for dealing with such incomplete information. In particular, we focus on the economic meaning of the DEA model that builds on assumptions of monotone and convex production possibility sets, and provide some extensions that further exploit this economic interpretation. This perspective on DEA is all the more attractive since its original use for technical efficiency analysis is sometimes questionable given its restrictive production assumptions. An application to German farm types complements our methodological discussion. By using nonparametric tools to test specific hypotheses about profit differences, we further demonstrate the potential of the non-parametric approach in deriving strong and robust statistical evidence while imposing minimal structure on the setting under study.
|Date of creation:||2002|
|Contact details of provider:|| Postal: Naamsestraat 69, 3000 Leuven|
Phone: +32-(0)16-32 67 25
Fax: +32-(0)16-32 67 96
Web page: http://www.econ.kuleuven.ac.be/ew/academic/econover/default.htm
More information through EDIRC
|Order Information:|| Email: |
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.:
- McFadden, Daniel, 1978. "Cost, Revenue, and Profit Functions," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 1 McMaster University Archive for the History of Economic Thought.
- Gary D. FERRIER & Kristiaan KERSTENS & Philippe VANDEN EECKAUT, 1994.
"Radial and Nonradial Technical Efficiency Measures on DEA Reference Technology : A Comparison Using US Banking Data,"
Discussion Papers (REL - Recherches Economiques de Louvain)
1994043, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- FERRIER, Gary & KERSTENS, Kris & VANDEN EECKAUT, Philippe, 1994. "Radial and Nonradial Technical Efficiency Measures on a DEA Reference Technology : A Comparison using US Banking Data," CORE Discussion Papers 1994023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Ferrier, G. D. & Kerstens, K. & Vanden Eeckaut, P., "undated". "Radial and nonradial technical efficiency measures on a DEA reference technology: a comparison using US banking data," CORE Discussion Papers RP 1156, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Simar, L. & Wilson, P.W., 1999.
"Statistical Inference in Nonparametric Frontier Models: the State of the Art,"
9904, Catholique de Louvain - Institut de statistique.
- Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
- M. Stone, 2002. "How not to measure the efficiency of public services (and how one might)," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 165(3), pages 405-434.
- Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, 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.
- M. J. Farrell, 1959. "The Convexity Assumption in the Theory of Competitive Markets," Journal of Political Economy, University of Chicago Press, vol. 67, pages 377-377.
- Fare, Rolf & Zelenyuk, Valentin, 2003. "On aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 146(3), pages 615-620, May.
- Léopold Simar & Paul W. Wilson, 1998.
"Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models,"
INFORMS, vol. 44(1), pages 49-61, January.
- SIMAR, Léopold & WILSON, Paul, 1995. "Sensitivity Analysis to Efficiency Scores : How to Bootstrap in Nonparametric Frontier Models," CORE Discussion Papers 1995043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Simar, L. & Wilson, P.W., "undated". "Sensitivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models," CORE Discussion Papers RP 1304, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Erik Mathijs & Johan F. M. Swinnen, 2001. "Production Organization And Efficiency During Transition: An Empirical Analysis Of East German Agriculture," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 100-107, February.
- Hanoch, Giora & Rothschild, Michael, 1972. "Testing the Assumptions of Production Theory: A Nonparametric Approach," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 256-275, March-Apr.
- Zieschang, Kimberly D., 1984. "An extended farrell technical efficiency measure," Journal of Economic Theory, Elsevier, vol. 33(2), pages 387-396, August.
- Elie Appelbaum & Aman Ullah, 1996.
"Estimation of moments and production decisions under uncertainty,"
1996_9, York University, Department of Economics.
- Elie Appelbaum & Aman Ullah, 1997. "Estimation Of Moments And Production Decisions Under Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 631-637, November.
- Faere,Rolf & Grosskopf,Shawna, 1987. "On price efficiency," Discussion Paper Serie A 119, University of Bonn, Germany.
- Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January.
- Talluri, Srinivas & Whiteside, Mary M. & Seipel, Scott J., 2000. "A nonparametric stochastic procedure for FMS evaluation," European Journal of Operational Research, Elsevier, vol. 124(3), pages 529-538, August.
- Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 343-386, October.
- Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140.
- Laurens Cherchye & Tom Van Puyenbroeck, 2001. "Technical Efficiency Evaluation: Naturally Dual!," Public Economics Working Paper Series wptchff, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
- Piesse, Jenifer & Thirtle, Colin & Turk, Jernej, 1996. "Efficiency and Ownership in Slovene Dairying: A Comparison of Econometric and Programming Techniques," Journal of Comparative Economics, Elsevier, vol. 22(1), pages 1-22, February.
- Timo Kuosmanen & Thierry Post, 2002. "Nonparametric Efficiency Analysis under Price Uncertainty: A First-Order Stochastic Dominance Approach," Journal of Productivity Analysis, Springer, vol. 17(3), pages 183-200, May.
- Sarris, Alexander H & Doucha, Tomas & Mathijs, Erik, 1999. "Agricultural Restructuring in Central and Eastern Europe: Implications for Competitiveness and Rural Development," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(3), pages 305-329, August.
- Silva Portela, Maria Conceicao A. & Thanassoulis, Emmanuel, 2005. "Profitability of a sample of Portuguese bank branches and its decomposition into technical and allocative components," European Journal of Operational Research, Elsevier, vol. 162(3), pages 850-866, May.
- Fare, Rolf & Grosskopf, Shawna & Nelson, Julianne, 1990. "On Price Efficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(3), pages 709-720, August.
- 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.
- Subal C. Kumbhakar, 2001. "Estimation of Profit Functions When Profit Is Not Maximum," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 1-19.
- Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
When requesting a correction, please mention this item's handle: RePEc:wpe:papers:ces0202. 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: (Kristof Bosmans)
If references are entirely missing, you can add them using this form.