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Return to Dollar, Generalized Distance Function and the Fisher Productivity Index

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  • José Zofío
  • Angel Prieto

Abstract

Exploring the duality between a return to dollar definition of profit and the generalized distance function we establish the relationship between the Laspeyres, Paasche and Fisher productivity indexes and their alternative Malmquist indexes counterparts. By proceeding this way, we propose a consistent decomposition of these productivity indexes into two mutually exclusive components. A technical component represented by the Malmquist index and an economical component which can be identified with the contribution that allocative criteria make to productivity change. With regard to the Fisher index, we indicate how researchers can further decompose the Malmquist technical component rendering explicit the sources of productivity change. We also show how the proposed model can be implemented by means of Data Envelopment Analysis techniques, and illustrate the empirical process with an example data set.
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  • José Zofío & Angel Prieto, 2006. "Return to Dollar, Generalized Distance Function and the Fisher Productivity Index," Spanish Economic Review, Springer;Spanish Economic Association, vol. 8(2), pages 113-138, June.
    • Handle: RePEc:spr:specre:v:8:y:2006:i:2:p:113-138
    DOI: 10.1007/s10108-006-9004-0
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    2. Lien, Gudbrand & Kumbhakar, Subal C. & Alem, Habtamu, 2018. "Endogeneity, heterogeneity, and determinants of inefficiency in Norwegian crop-producing farms," International Journal of Production Economics, Elsevier, vol. 201(C), pages 53-61.
    3. Chia-Yen Lee, 2017. "Directional marginal productivity: a foundation of meta-data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(5), pages 544-555, May.
    4. Halická, Margaréta & Trnovská, Mária, 2019. "Duality and profit efficiency for the hyperbolic measure model," European Journal of Operational Research, Elsevier, vol. 278(2), pages 410-421.
    5. Aparicio, Juan & Zofío, José L., 2021. "Economic cross-efficiency," Omega, Elsevier, vol. 100(C).
      • Aparicio, J. & Zofío, J.L., 2019. "Economic Cross-Efficiency," ERIM Report Series Research in Management ERS-2019-001-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    6. Lee, Chia-Yen & Johnson, Andrew L., 2012. "Two-dimensional efficiency decomposition to measure the demand effect in productivity analysis," European Journal of Operational Research, Elsevier, vol. 216(3), pages 584-593.
    7. Fernando Jiménez-Sáez & Jon Mikel Zabala-Iturriagagoitia & Jose Luis Zofío, 2013. "Who leads research productivity growth? Guidelines for R&D policy-makers," Scientometrics, Springer;Akadémiai Kiadó, vol. 94(1), pages 273-303, January.
    8. Jiménez, Fernando & Zabala Iturriagagoitia, Jon Mikel & Zofío, José Luis, 2007. "Efficiency in Public Research Centers: Evaluating the Spanish Food Technology Program," Working Papers in Economic Theory 2007/04, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    9. Aparicio, Juan & Zofío, José L., 2023. "Decomposing profit change: Konüs, Bennet and Luenberger indicators," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    10. Juan Aparicio & José L. Zofío, 2020. "New Definitions of Economic Cross-efficiency," International Series in Operations Research & Management Science, in: Juan Aparicio & C. A. Knox Lovell & Jesus T. Pastor & Joe Zhu (ed.), Advances in Efficiency and Productivity II, pages 11-32, Springer.
    11. Jiménez-Sáez, Fernando & Zabala-Iturriagagoitia, Jon Mikel & Zofío, José L. & Castro-Martínez, Elena, 2011. "Evaluating research efficiency within National R&D Programmes," Research Policy, Elsevier, vol. 40(2), pages 230-241, March.
    12. Barbero, Javier & Zofío, José L., 2023. "The measurement of profit, profitability, cost and revenue efficiency through data envelopment analysis: A comparison of models using BenchmarkingEconomicEfficiency.jl," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    13. Kumbhakar, Subal C., 2011. "Estimation of production technology when the objective is to maximize return to the outlay," European Journal of Operational Research, Elsevier, vol. 208(2), pages 170-176, January.

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    More about this item

    Keywords

    Generalized distance function; Return to dollar; Fisher and Malmquist productivity indexes; C43; C61; D24;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • 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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