Temporal technical and profit efficiency measurement: definitions, duality and aggregation results

Walter Briec (), Commes Christine and Kristiaan Kerstens
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Walter Briec: UPVD - Université de Perpignan Via Domitia

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Abstract: The shortage function, an important tool in production theory, measures potential increases in outputs and decreases in inputs for a given direction g at a given date. To develop a temporal version of technical efficiency measurement, we introduce the concept of a temporal shortage function. This temporal efficiency measure is easily computed using linear programming. We also establish a duality result stating that the temporal profit function and the temporal shortage function are dual to one another. This result has two consequences. First, one can derive a shadow price path via the shadow prices of the temporal shortage function. Second, transposing the classic Farrell inefficiency decomposition, temporal profit efficiency is decomposed into temporal technical and temporal allocative efficiency components.

Date: 2006-09-01
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Published in International Journal of Production Economics, 2006, 103 (1), pp.48-63

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Journal Article: Temporal technical and profit efficiency measurement: Definitions, duality and aggregation results (2006)
Working Paper: Temporal technical and profit efficiency measurement: Definitions, duality and aggregation results (2006)
Working Paper: Temporal Technical and Profit Efficiency Measurement: Definitions, Duality and Aggregation Results (2005)
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