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Profit, Directional Distance Functions, and Nerlovian Efficiency

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Listed:
  • R. G. Chambers

    (University of Maryland at College Park)

  • Y. Chung

    (Southern Illinois University at Carbondale)

  • R. Färe

    (Oregon State University)

Abstract

The directional technology distance function is introduced, given an interpretation as a min-max, and compared with other functional representations of the technology including the Shephard input and output distance functions and the McFadden gauge function. A dual correspondence is developed between the directional technology distance function and the profit function, and it is shown that all previous dual correspondences are special cases of this correspondence. We then show how Nerlovian (profit-based) efficiency measures can be computed using the directional technology distance function.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:joptap:v:98:y:1998:i:2:d:10.1023_a:1022637501082
    DOI: 10.1023/A:1022637501082
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    References listed on IDEAS

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    2. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
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