Productivity Paradoxes and Their Resolution

Shlomo Maital and Alexander Vaninsky

Journal of Productivity Analysis, 2000, vol. 14, issue 3, 207 pages

Abstract: Foran objective function, how should each argument be assigned itsappropriate role in the change of the objective function, whenthe arguments are interrelated? In this paper, it is shown thatthe commonly used approaches may lead to results contradictoryto straightforward economic reasoning, and hence generating paradoxes.We begin with a known paradox of structural change—whenan increase in the relative weight of inexpensive goods appearsformally to generate an increase in average price. A new methodof partitioning changes in an objective function is introducedthat eliminates such paradoxes. Our method is illustrated withnumerical examples. Copyright Kluwer Academic Publishers 2000

Keywords: productivity indexes; index number theory; decision support systems (search for similar items in EconPapers)
Date: 2000
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DOI: 10.1023/A:1026542719694

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