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Improvement of Technical Efficiency of Firm Groups

Louisa Andriamasy (), Walter Briec () and Stéphane Mussard ()
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Louisa Andriamasy: CAEPEM, IAE, Université de Perpignan
Walter Briec: CAEPEM, IAE, Université de Perpignan

Cahiers de recherche from Departement d'Economique de l'École de gestion à l'Université de Sherbrooke

Abstract: Cooperation between firms can never improve the technical efficiency of any coalition of firms. This standard result of the productivity measurement literature is based on the directional distance function computed on firm groups. Directional distance functions are usually defined on the standard sum of input/output vectors. In this paper, the aggregation of input/output vectors is generalized thanks to an isomorphism in order to capture three results: the cooperation mproves technical efficiency ; the cooperation reduces technical efficiency ; and finally the cooperation between firms yields no variation of technical efficiency. In this case, the firms merge according to their inputs only because constraints are imposed on outputs, and conversely, they may merge according to the outputs they can produce because some limitations are imposed on the use of inputs.

Keywords: Aggregation; Cooperative games; Distance functions; Productivity; Technical efficiency (search for similar items in EconPapers)
JEL-codes: D21 D24 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2016-04
New Economics Papers: this item is included in nep-eff
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Related works:
Journal Article: Improvement of technical efficiency of firm groups (2020) Downloads
Working Paper: Improvement of Technical Efficiency of Firm Groups (2019) Downloads
Working Paper: Improvement of technical efficiency of firm groups (2016) Downloads
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