Indirect productivity measurement

✍ Scribed by Rolf Färe; Shawna Grosskopf; C. A. Knox Lovell

• Publisher: Springer
• Year: 1992
• Tongue: English
• Weight: 964 KB
• Volume: 2
• Category: Article
• ISSN: 0895-562X
• DOI: 10.1007/bf00156471

✦ Synopsis

Caves, Christensen and Diewert [1982a] showed that the Tiimqvist productivity index is superlative in a considerably more general sense than had been previously believed. We e xamine the allocative and technical efficiency hypotheses on which their finding rests. We show that the allocative efficiency hypothesis can be modified, which makes the Tijmqvist index superlative in a wider sense than even Caves, Christensen and Diewert showed, since it is consistent with a type of allocative efficiency other than the standard cost minimization and revenue maximization hypotheses considered by Caves, Christensen and Diewert. We also show that if the technical efficiency hypothesis is relaxed, the CCD result may no longer hold, and the distance functions that form the basis of the Malmquist productivity indexes, and hence of the Tomqvist productivity index, must be calculated. We then show how to calculate the underlying distance functions, and we argue that there are real advantages to doing so.