On directional scale elasticities

Bert Balk, Rolf Färe () and Giannis Karagiannis

Journal of Productivity Analysis, 2015, vol. 43, issue 1, 99-104

Abstract: In this paper we generalize the concept of scale elasticity to accommodate changes in any direction in the input–output space and not only in the radial input and output directions as was done so far with the conventional scale elasticity measure. Our departure point is that we view the scale elasticity as a directional derivative measure. Then for any functional representation of the technology and at a given point in the input–output space, the scale elasticity can be computed along any direction. By adjusting accordingly the direction vector we can measure appropriately factor returns with technologies exhibiting weak disposability of outputs and/or inputs. In addition, we do not have to restrict the analysis to only equi-proportional changes. Copyright Springer Science+Business Media New York 2015

Keywords: Scale elasticity; Technology; Radial distance function; Hyperbolic distance function; Directional distance function; Cost function; D21; D24 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jproda:v:43:y:2015:i:1:p:99-104

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DOI: 10.1007/s11123-014-0399-6

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