Is the directional distance function a complete generalization of the Farrel approach?

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dc.contributor.author Aparicio, Juan
dc.contributor.author Pastor, Jesús T.
dc.contributor.author Zofío, José L.
dc.contributor.other UAM. Departamento de Análisis Económico, Teoría Económica e Historia Económica es_ES
dc.date.accessioned 2014-11-14T15:05:54Z
dc.date.available 2014-11-14T15:05:54Z
dc.date.issued 2014-09
dc.identifier.citation Working Papers in Economic Analysis 5 (2014): 1-10 en_US
dc.identifier.issn 1885-6888
dc.identifier.uri http://hdl.handle.net/10486/662546 en
dc.description.abstract Cost or revenue efficiency measurement based on the approach initiated by Farrell has received great attention from academics and practitioners since the fifties. Farrell’s approach decomposes cost efficiency into two different sources, viz. technical efficiency and allocative efficiency. Technical efficiency is estimated by the implementation of the Shephard’s input or output distance functions, while allocative efficiency is derived as a residual between cost or revenue efficiency and its corresponding technical efficiency component. The directional distance function (DDF) was introduced later in the literature to complete duality theory with respect to the profit function and as a generalization of the Shephard input and output distance functions. Considering the case of cost efficiency we show that, although the DDF correctly encompasses the technical efficiency component of the Farrell approach, this is not true for the allocative component. Additionally, we show that allocative inefficiency is underestimated when the DDF-additive approach is used for decomposing cost inefficiency unless technical efficiency is assumed. es_ES
dc.format.extent 10 pag.
dc.format.mimetype application/pdf en
dc.language.iso eng en
dc.publisher Universidad Autónoma de Madrid, Departamento de Análisis Económico, Teoría Económica e Historia Económica es_ES
dc.relation.ispartof Working Papers in Economic Analysis en_US
dc.subject.other Technical efficiency en_US
dc.subject.other Allocative efficiency en_US
dc.subject.other Directional distance functions en_US
dc.title Is the directional distance function a complete generalization of the Farrel approach? en_US
dc.type article en_US
dc.subject.eciencia Economía es_ES
dc.identifier.publicationfirstpage 1
dc.identifier.publicationissue 5
dc.identifier.publicationlastpage 10
dc.type.version info:eu-repo/semantics/publishedVersion en
dc.rights.accessRights openAccess en


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