Value-based performance and its decomposition into direct price and quantity effects

Jean-Philippe Boussemart, Hervé Leleu and Raluca Parvulescu

European Journal of Operational Research, 2022, vol. 303, issue 1, 298-311

Abstract: Based on the idea that in real markets firms have some freedom to set their output prices and negotiate input unit costs, this paper introduces a new approach for value-based performance decomposition as the product of direct price and quantity effects. Our framework relies on the axiomatization of a value transformation set on which quantity, price and value distance functions can be defined. The methodology developed allows for various degrees of dependency between quantity and price as well as for different degrees of freedom in price setting. The value-based performance decomposition can encompass all traditional measures such as cost, revenue, profit and profitability efficiencies. An application on French cattle farms illustrates the appeal of our approach for practitioners.

Keywords: Data envelopment analysis; Value transformation set; Value-based performance; Direct price efficiency (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Working Paper: Value-based performance and its decomposition into direct price and quantity effects (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:303:y:2022:i:1:p:298-311

DOI: 10.1016/j.ejor.2022.02.039

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