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Advisor(s)
Abstract(s)
This paper proposes an approach to compute cost efficiency in contexts where units can adjust input
quantities and to some degree prices so that through their joint determination they can minimise the
aggregate cost of the outputs they secure. The model developed is based on the data envelopment
analysis (DEA) framework and can accommodate situations where the degree of influence over prices
ranges from minimal to considerable. When units cannot influence prices at all the model proposed
reduces to the standard cost efficiency DEA model for the case where prices are taken as exogenous.
In addition to the cost efficiency model, we introduce an additive decomposition of potential cost savings
into a quantity and a price component, based on Bennet indicators.
Description
Keywords
Cost efficiency Price efficiency Bennet indicators Data envelopment analysis
Pedagogical Context
Citation
PORTELA, Maria; THANASSOULIS, Emmanuel - Economic efficiency when prices are not fixed: disentangling quantity and price efficiency. Omega - The International Journal of Management Science. ISSN 0305-0483. Vol. 47 (2014), p. 36–44
Publisher
Elsevier