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Directional output distance functions: endogenous directions based on exogenous normalization constraints

Author

Listed:
  • R. Färe
  • S. Grosskopf
  • G. Whittaker

Abstract

In response to a question raised by Knox Lovell, we develop a method for estimating directional output distance functions with endogenously determined direction vectors based on exogenous normalization constraints. This is reminiscent of the Russell measure proposed by Färe and Lovell (J Econ Theory 19:150–162, 1978 ). Moreover it is related to the slacks-based directional distance function introduced by Färe and Grosskopf (Eur J Oper Res 200:320–322, 2010a , Eur J Oper Res 206:702, 2010b ). Here we show how to use the slacks-based function to estimate the optimal directions. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • R. Färe & S. Grosskopf & G. Whittaker, 2013. "Directional output distance functions: endogenous directions based on exogenous normalization constraints," Journal of Productivity Analysis, Springer, vol. 40(3), pages 267-269, December.
    • Handle: RePEc:kap:jproda:v:40:y:2013:i:3:p:267-269
    DOI: 10.1007/s11123-012-0333-8
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    References listed on IDEAS

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    1. Jose Zofio & Jesus Pastor & Juan Aparicio, 2013. "The directional profit efficiency measure: on why profit inefficiency is either technical or allocative," Journal of Productivity Analysis, Springer, vol. 40(3), pages 257-266, December.
    2. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
    3. W. Briec, 1997. "A Graph-Type Extension of Farrell Technical Efficiency Measure," Journal of Productivity Analysis, Springer, vol. 8(1), pages 95-110, March.
    4. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
    5. R. G. Chambers & Y. Chung & R. Färe, 1998. "Profit, Directional Distance Functions, and Nerlovian Efficiency," Journal of Optimization Theory and Applications, Springer, vol. 98(2), pages 351-364, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    DEA; Directional distance functions; Slack-based measures; C61; D24; D92; O33;
    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
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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