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Profit,Directional Distance Functions,and Nerlovian Efficiency
Authors:Chambers  R G  Chung  Y  Färe  R
Institution:(1) Department of Agricultural and Resource Economics, University of Maryland at College Park, College Park, Maryland;(2) Department of Economics, Southern Illinois University at Carbondale, Carbondale, Illinois;(3) Department of Economics, and Department of Agricultural and Resource Economics, Oregon State University, Corvallis, Oregon
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.
Keywords:Directional distance functions  Nerlovian efficiency  duality  profit functions
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