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66
The Directional Distance Function and Measurement of Super Efficiency: An Application to Airlines Data
, 2004
"... Lovell and Rouse (LR) have recently proposed a modification of the standard DEA model that overcomes the infeasibility problem often encountered in computing superefficiency. In the LR procedure one appropriately scales up the observed input vector (scale down the output vector) of the relevant sup ..."
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Lovell and Rouse (LR) have recently proposed a modification of the standard DEA model that overcomes the infeasibility problem often encountered in computing superefficiency. In the LR procedure one appropriately scales up the observed input vector (scale down the output vector) of the relevant superefficient firm thereby usually creating its inefficient surrogate. An alternative procedure proposed in this paper uses the directional distance function introduced by Chambers, Chung, and Fre and the resulting NerloveLuenberger (NL) measure of superefficiency. The fact that the directional distance function combines features of both an inputoriented and an outputoriented model, generally leads to a more complete ranking of the observations than either of the oriented models. An added advantage of this approach is that the NL superefficiency measure is unique and does not depend on any arbitrary choice of a scaling parameter. A data set on international airlines from Coelli, Perelman, and GriffelTatje (2002) is utilized in an illustrative empirical application. THE DIRECTIONAL DISTANCE FUNCTION AND MEASUREMENTOF SUPEREFFICIENCY: AN APPLICATION TO AIRLINES DATA
ON FAIRNESS AND WELFARE ANALYSIS UNDER UNCERTAINTY by
"... Abstract: This paper investigates the role of fairness, uncertainty, and a "veil of ignorance " in efficient resource allocation. It focuses on the choice of private and public goods, the method of financing, as well as the choice of information available for public decisionmaking. A fair ..."
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Abstract: This paper investigates the role of fairness, uncertainty, and a "veil of ignorance " in efficient resource allocation. It focuses on the choice of private and public goods, the method of financing, as well as the choice of information available for public decisionmaking. A fairequivalent and Pareto efficient allocation is presented using a maximin criterion defined in terms of individual willingnesstopay. The paper investigates the role of information in public decision making in terms of its implications for both efficiency and fairness. While better information typically generates improved efficiency, it can also contribute to unfair allocations. The effects of asymmetric information are discussed.
Productivity Growth and Biased Technological Change in Hydroelectric Generating Dams
, 2008
"... This paper analyses productivity growth and the nature of technical change in a sample of Portuguese hydroelectric generating plants over the period 2001 to 2004. In a first step, we employ the Luenberger productivity indicator to estimate and decompose productivity change. The results paint a pic ..."
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This paper analyses productivity growth and the nature of technical change in a sample of Portuguese hydroelectric generating plants over the period 2001 to 2004. In a first step, we employ the Luenberger productivity indicator to estimate and decompose productivity change. The results paint a picture of mixed productivity performance in the Portuguese energy sector. In a second step, we analyse the nature of this technical change by using the recent concept of parallel neutrality (Briec et al., 2006). We observe a global shift in the best practice frontier as well as evidence of input bias in technical change. JEL: G21, D24
Portfolio Selection in Multidimensional General and Partial Moment Space
, 2007
"... This paper develops a general approach for the single period portfolio optimization problem in a multidimensional general and partial moment space. A shortage function is defined that looks for possible increases in odd moments and decreases in even moments. A main result is that this shortage func ..."
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This paper develops a general approach for the single period portfolio optimization problem in a multidimensional general and partial moment space. A shortage function is defined that looks for possible increases in odd moments and decreases in even moments. A main result is that this shortage function ensures sufficient conditions for global optimality. It also forms a natural basis for developing tests on the influence of additional moments. Furthermore, a link is made with an approximation of an arbitrary order of a general indirect utility function. This nonparametric efficiency measurement framework permits to differentiate mainly between portfolio efficiency and allocative efficiency. Finally, information can, in principle, be inferred about the revealed risk aversion, prudence, temperance and other higherorder risk characteristics of investors. A meanvarianceskewnesskurtosis example on a small sample of assets serves as an empirical illustration. We also compare the relative fit of a series of lower partial moment models. Keywords: shortage function, efficient frontier, Kmoment portfolios. 1
Environmental Efficiency of the Indian Cement Industry: An Interstate Analysis
"... Institute for Social and Economic Change (ISEC) is engaged in interdisciplinary research in analytical and applied areas of the social sciences, encompassing diverse aspects of development. ISEC works with central, state and local governments as well as international agencies by undertaking systemat ..."
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Institute for Social and Economic Change (ISEC) is engaged in interdisciplinary research in analytical and applied areas of the social sciences, encompassing diverse aspects of development. ISEC works with central, state and local governments as well as international agencies by undertaking systematic studies of resource potential, identifying factors influencing growth and examining measures for reducing poverty. The thrust areas of research include state and local economic policies, issues relating to sociological and demographic transition, environmental issues and fiscal, administrative and political decentralization and governance. It pursues fruitful contacts with other institutions and scholars devoted to social science research through collaborative research programmes, seminars, etc. The Working Paper Series provides an opportunity for ISEC faculty, visiting fellows and PhD scholars to discuss their ideas and research work before publication and to get feedback from their peer group. Papers selected for publication in the series present empirical analyses and generally deal with wider issues of public policy at a sectoral, regional or national level. These working papers undergo review but typically do not present final research results, and constitute works in progress. 1
Risk premiums and benefit measures for generalizedexpectedutility theories
 Journal of Risk and Uncertainty
, 1998
"... Over the past �fteen years, the theory of choice under uncertainty has undergone radical change. The pivotal contribution was Machina�s (1982) demonstration that a large class of preferences could be locally approximated by expectedutility functionals and that global preferences inherited propertie ..."
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Over the past �fteen years, the theory of choice under uncertainty has undergone radical change. The pivotal contribution was Machina�s (1982) demonstration that a large class of preferences could be locally approximated by expectedutility functionals and that global preferences inherited properties, such as risk aversion, of the local utility functions. Less progress has been made, however, in developing tools relating to nonlocal properties of preferences such as the absolute and relative risk premiums used in expectedutility theory. During this same period, however, the literature on choice under certainty made substantial progress in developing new techniques for characterizing preferences and technologies using the concepts of distance (Färe, 1988) and bene�t functions (Luenberger, 1992). In particular, Luenberger (1992, 1994) introduced the bene�t function and demonstrated its usefulness in characterizing preferences and Paretoefficient outcomes. It is natural, therefore, to ask whether these techniques can be informatively applied to problems of choice under uncertainty. This paper shows that a wide range of standard tools for the analysis of economic
Partial Market liberalization and the efficiency of policy reform: the case of the European dairy sector
 American Journal of Agricultural Economics, 84(4):10031020) COM/AGR/TD/WP(2004)19/FINAL Burrell, A
, 2002
"... This article analyzes the efficiency of partial market liberalization and policy reform with an application to the European dairy sector. In a second best world, partial moves toward market liberalization are not always efficiency improving. We develop a general equilibrium model to investigate the ..."
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This article analyzes the efficiency of partial market liberalization and policy reform with an application to the European dairy sector. In a second best world, partial moves toward market liberalization are not always efficiency improving. We develop a general equilibrium model to investigate the efficiency implications of discrete changes in government policy. The analysis covers price and quantity instruments used in both domestic and trade policy. We derive simple conditions under which partial market liberalization is efficiency improving. We apply the approach to agricultural policy reform in the European dairy sector and identify market liberalization scenarios that are "not " efficiency improving. Key words: dairy, efficiency, European Union, market liberalization, policy reform. Government policy has major impacts on agricultural markets. For example, in the United States, Canada, and Europe, agricultural policy has increased farm income through price support programs for grains and milk. Such policies are often complemented by import restrictions and export subsidies. Canada and Europe have also implemented production quotas (e.g., in the dairy sector). As a result, government pricing policy and trade policy have distorted agricultural markets (e.g.,
On the differentiability of the benefit function
, 2004
"... The benefit function, introduced by Luenberger, provides a tool for well−defined cardinal comparisons of different bundles of goods. It also allows to study in an orignal way optimal consumers and firms choices, Pareto−optimality etc... In this note we prove that the benefit function is differentiab ..."
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The benefit function, introduced by Luenberger, provides a tool for well−defined cardinal comparisons of different bundles of goods. It also allows to study in an orignal way optimal consumers and firms choices, Pareto−optimality etc... In this note we prove that the benefit function is differentiable under standard conditions. This property is useful in order to study optimal choices.
2008), “Estimating Demand With Distance Functions: Parameterization in The Primal and the Dual
 Journal of Econometrics
, 1970
"... Our purpose is to investigate the ability of different parametric forms to ‘correctly ’ estimate consumer demands based on distance functions using Monte Carlo methods. Our approach combines economic theory, econometrics and quadratic approximation. We begin by deriving parameterizations for transfo ..."
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Our purpose is to investigate the ability of different parametric forms to ‘correctly ’ estimate consumer demands based on distance functions using Monte Carlo methods. Our approach combines economic theory, econometrics and quadratic approximation. We begin by deriving parameterizations for transformed quadratic functions which are linear in parameters and characterized by either homogeneity or which satisfy the translation property. Homogeneity is typical of Shephard distance functions and expenditure functions, whereas translation is characteristic of benefit/shortage or directional distance functions. The functional forms which satisfy these conditions and include both first and second order terms are the translog and quadratic forms, respectively. We then derive a primal characterization which is homogeneous and parameterized as translog and a dual model which satisfies the translation property and is specified as quadratic. We assess performance by focusing on empirical violations of the regularity conditions. Our analysis corroborates results from earlier Monte Carlo studies on the production side suggesting that the quadratic form more closely approximates the ‘true ’ technology or in our context consumer preferences than the translog.
Dual Approaches to the Analysis of Risk Aversion
"... Dual approaches have proved their value in many areas of economic analysis. Until recently, however, they have been virtually ignored in the analysis of choice under uncertainty. Instead reliance has been placed almost exclusively on primal methods, and, in particular, on the expectedutility model. ..."
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Dual approaches have proved their value in many areas of economic analysis. Until recently, however, they have been virtually ignored in the analysis of choice under uncertainty. Instead reliance has been placed almost exclusively on primal methods, and, in particular, on the expectedutility model. Perhaps the best explanation of the expectedutility model’s continuing endurance, in spite of its wellknown weaknesses, is its ability to yield predictions about economic behavior. Much of its ‘predictive bite’, however, comes from what many regard as its Achilles heel, the independence axiom and its associated structural property — additive separability. A prominent challenge for choice theory is to develop a model that retains this predictive bite while dispensing with the unpleasant characteristics associated with the independence axiom. Additively separable preferences were discarded as a reasonable representation of preferences in standard consumer theory decades ago. Instead, when extra precision is required, reliance is usually placed on direct assumptions about the nature of the decisionmaker’s preference map. In particular, notions of translation homotheticity, homotheticity and quasihomotheticity have proven very useful in both empirical and theoretical analyses. These restrictions have percolated into expectedutility theory, albeit in a disguised form, as the notions of constant absolute risk