Decomposing profit change: Konüs, Bennet and Luenberger indicators
We introduce complementary decompositions of profit change that, relying on the duality between the profit function and the directional distance function, shed light on the different sources of profit growth including measures of technical efficiency, allocative efficiency and technological change....
| Autores: | , |
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| Tipo de recurso: | artículo |
| Fecha de publicación: | 2023 |
| País: | España |
| Institución: | Universidad Autónoma de Madrid |
| Repositorio: | Biblos-e Archivo. Repositorio Institucional de la UAM |
| Idioma: | inglés |
| OAI Identifier: | oai:repositorio.uam.es:10486/718334 |
| Acceso en línea: | http://hdl.handle.net/10486/718334 https://dx.doi.org/10.1016/j.seps.2023.101573 |
| Access Level: | acceso abierto |
| Palabra clave: | Allocative inefficiency Data envelopment analysis Directional distance function Profit change Technical inefficiency Economía |
| Sumario: | We introduce complementary decompositions of profit change that, relying on the duality between the profit function and the directional distance function, shed light on the different sources of profit growth including measures of technical efficiency, allocative efficiency and technological change. Our decompositions extend the literature on Konüs and Bennet quantity and price indicators to profit change. The first decomposition is ‘exact’ in the sense of Diewert, by completely exhausting the sources of profit change into profit inefficiency change (including technical and allocative inefficiency change), technological change, and output and input price change. The second decomposition equates the Bennet quantity indicator to a productivity measure represented by the Luenberger indicator plus allocative inefficiency change. We deem it ‘complete’ because in contrast to the existing literature, it retains the information on allocative inefficiency change while preventing the existence of residual terms capturing price variations, whose meaningful interpretation has not been addressed until now. Our proposed solution takes advantage of the flexibility of the directional distance function when choosing a suitable directional vector. All decompositions have the same structural form and therefore their components can be compared to each other vis-à-vis, providing alternative measures of equivalent sources of profit growth |
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