Improvement of Technical Efficiency of Firm Groups

Walter Briec and Stéphane Mussard
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Walter Briec: IAE Perpignan - Institut d'Administration des Entreprises - Perpignan - UPVD - Université de Perpignan Via Domitia, LAMPS - LAboratoire de Modélisation Pluridisciplinaire et Simulations - UPVD - Université de Perpignan Via Domitia

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Abstract: Cooperation between firms can never improve the technical efficiency of any firm coalition. The directional distance function, by virtue of its additive nature, is a useful tool that outlines this impossibility. In this paper, the additive aggregation scheme of input/output vectors is generalized according to an aggregator. Accordingly, cooperation between firms may increase the technical efficiency of the firm group. This improvement is shown to be compatible with nonjoint semilattice technologies that bring out either output or input (weak) complementarity. Firm games are investigated to show that firms may merge on the basis of their inputs due to constraints imposed on outputs. Conversely, they may merge with respect to the outputs they can produce because of limitations imposed on inputs.

Keywords: Productivity and competitiveness; Aggregation; Cooperative games; Distance functions; Technical efficiency JEL Codes: D21; D24 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-eff, nep-gth and nep-ore
Note: View the original document on HAL open archive server: https://hal.science/hal-02387847v1
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Published in European Journal of Operational Research, inPress, ⟨10.1016/j.ejor.2019.11.048⟩

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Related works:
Journal Article: Improvement of technical efficiency of firm groups (2020)
Working Paper: Improvement of technical efficiency of firm groups (2016)
Working Paper: Improvement of Technical Efficiency of Firm Groups (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02387847

DOI: 10.1016/j.ejor.2019.11.048

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