Profit Efficiency and its Estimation

Rolf Färe () and Valentin Zelenyuk
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Rolf Färe: Department of Economics, Oregon State University and Department of Agricultural and Resource Economics, University of Maryland, USA

No WP072020, CEPA Working Papers Series from University of Queensland, School of Economics

Abstract: n this article, we revisit the profit efficiency measurement theory and estimation. We derive a new theoretical result that shows the Nerlovian profit efficiency is a special case of the recently introduced general profit efficiency measure. We also present a new decomposition of profit efficiency. Finally, we also outline a simple way of estimating profit efficiency in the Data Envelopment Analysis (DEA) and Free Disposal Hull (FDH) frameworks, while avoiding the computational intensity of linear programming and circumventing the lack of more detailed data.

Keywords: Profit Efficiency; Data Envelopment Analysis, DEA; Free Disposal Hull, FDH. (search for similar items in EconPapers)
JEL-codes: C43 D24 L25 (search for similar items in EconPapers)
Date: 2020-06
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uqcepa:150

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