A measure of price advantage and its decomposition into output- and input-specific effects

Kassoum Ayouba, Jean-Philippe Boussemart, Henri-Bertrand Lefer, Hervé Leleu and Raluca Parvulescu

European Journal of Operational Research, 2019, vol. 276, issue 2, 688-698

Abstract: In this paper, we develop a price advantage measure obtained as the difference between efficiency scores computed with quantity-based and value-based data. This measure is interpreted as an increase in the firm's profit rate due to a favourable input and output price environment. Compared to traditional allocative efficiency measure, which uses only the evaluated firm's prices, price advantage measure considers prices of peers in the market. Our main contribution is to show that total-price advantage decomposes into the sum of output- and input-specific price advantages. The application of the measure to a French farm's dataset in the context of the successive common agricultural policy reforms – aiming at the liberalization of agricultural prices (1992–2013) – illustrates our theoretical model.

Keywords: Data analysis envelopment; Price advantage; Technical efficiency; Value efficiency; Allocative efficiency (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221719300773
Full text for ScienceDirect subscribers only

Related works:
Working Paper: A measure of price advantage and its decomposition into output- and input-specific effects (2019)
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:eee:ejores:v:276:y:2019:i:2:p:688-698

DOI: 10.1016/j.ejor.2019.01.042

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().