Input price variation across locations and a generalized measure of cost efficiency

Subhash Ray, Lei Chen () and Kankana Mukherjee

International Journal of Production Economics, 2008, vol. 116, issue 2, 208-218

Abstract: We propose a non-parametric model for global cost minimization as a framework for optimal allocation of a firm's output target across multiple locations, taking account of differences in input prices and technologies across locations. This should be useful for firms planning production sites within a country and for foreign direct investment decisions by multi-national firms. Two illustrative examples are included. The first example considers the production location decision of a manufacturing firm across a number of adjacent states within the US. In the other example, we consider the optimal allocation of US and Canadian automobile manufacturers across the two countries.

Keywords: Cost; minimization; Data; envelopment; analysis; Heterogeneous; technology; Location; efficiency (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:116:y:2008:i:2:p:208-218

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