Efficient firm groups: Allocative efficiency in cooperative games

Walter Briec and Stéphane Mussard

European Journal of Operational Research, 2014, vol. 239, issue 1, 286-296

Abstract: The concept of efficiency in groups postulates that a coalition of firms has to record a smaller distance toward the aggregate technology frontier compared with the sum of individual distances. Efficiency analysis (either allocative or technical) is defined with respect to cooperative firm game in order to provide operational distance functions, the so-called pseudo-distance functions. These pseudo-distances belong to the core interior of the allocative firm game, in other terms, any given firm coalition may always improve its allocative efficiency. We prove that such a result is impossible for technical efficiency, i.e., the technical efficiency cannot increase for all possible coalitions.

Keywords: Allocative efficiency; Distance functions; Games; Productivity (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:239:y:2014:i:1:p:286-296

DOI: 10.1016/j.ejor.2014.04.049

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