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Download fileDirect estimation of marginal characteristics of nonparametric production frontiers in the presence of undesirable outputs
There is extensive literature on the estimation of marginal characteristics of nonparametric
production frontiers, including various marginal rates and elasticity measures. It has recently
been shown that all such characteristics can be evaluated by a unifying linear programming
approach applicable to any polyhedral production technology. In this paper we show how this
approach can be applied to polyhedral technologies incorporating undesirable outputs. In
particular, we derive a linear programming method for the direct assessment of the marginal
rate of transformation between a bad and a good output often used for the estimation of
the unobserved price of the bad output. In contrast with the existing methods based on a
conventionally specified directional distance function, the new approach does not require the
assessment of two shadow prices of the good and bad outputs. It also correctly estimates
one-sided marginal rates in all cases in which the shadow prices on nonsmooth production
frontiers are not unique.
History
School
- Business and Economics
Department
- Business
Published in
European Journal of Operational ResearchVolume
279Issue
1Pages
258-276Citation
PODINOVSKI, V.V., 2019. Direct estimation of marginal characteristics of nonparametric production frontiers in the presence of undesirable outputs. European Journal of Operational Research, 279 (1), pp.258-276.Publisher
© ElsevierVersion
- AM (Accepted Manuscript)
Publisher statement
This paper was accepted for publication in the journal European Journal of Operational Research and the definitive published version is available at https://doi.org/10.1016/j.ejor.2019.05.024Acceptance date
2019-05-16Publication date
2019-05-22Copyright date
2019ISSN
0377-2217Publisher version
Language
- en