Inner and Outer Approximations of Technology: A Shadow Profit Approach

Hervé Leleu

No 2012-ECO-06, Working Papers from IESEG School of Management

Abstract: In this paper we extend the taxonomy on inner and outer approximations to a technology by assuming that price data are not available. Mimicking Varian [Econometrica, 52(3) (1984) 579] we introduce a Weak Axiom of Shadow Profit Maximization (WASPM) to test if observed production plans are compatible with technically efficient behavior. If the test fails for an observed sample, we then characterize the maximal subset of observed production plans that meets WASPM and we derive lower and upper bounds on technical efficiency for production plans that are observed but not in this subset. We also derive linear programs to implement these bounds.

Keywords: Technical efficiency; Shadow prices; Bounds on inefficiency (search for similar items in EconPapers)
Pages: 10 pages
Date: 2012-04
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://my.ieseg.fr/bienvenue/DownloadDoc.asp?Fich= ... 012-ECO-06_Leleu.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 FORBIDDEN (http://my.ieseg.fr/bienvenue/DownloadDoc.asp?Fich=211310324_2012-ECO-06_Leleu.pdf [301 Moved Permanently]--> https://my.ieseg.fr/bienvenue/DownloadDoc.asp?Fich=211310324_2012-ECO-06_Leleu.pdf [301 Moved Permanently]--> https://iesegnet.sharepoint.com/sites/Intranet-Home/bienvenue/DownloadDoc.asp?Fich=211310324_2012-ECO-06_Leleu.pdf)

Related works:
Journal Article: Inner and outer approximations of technology: A shadow profit approach (2013)
Working Paper: Inner and outer approximations of technology: a shadow profit approach (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:e201206

Access Statistics for this paper

More papers in Working Papers from IESEG School of Management Contact information at EDIRC.
Bibliographic data for series maintained by Lies BOUTEN ().