Directional distance functions and rate-of-return regulation

DOI10.1155/2012/731497MaRDI QIDQ454469zbMATH OpenOpenAlexWikidataFDO

Authors Jesus T. Pastor, Juan Aparicio

Publication date 8 October 2012

Published in Advances in Decision Sciences (Search for Journal in Brave)

Copyright license Creative Commons Attribution 4.0 International

Full work available at URL https://semanticscholar.org/paper/d115781c8dc535b0b6b165b7f5a1fc822ac823d9

zbMATH Keywords

directional distance functionsrate-of-return regulation

Mathematics Subject Classification ID

Production theory, theory of the firm (91B38)

Review text

Summary: We are concerned with formulating directional distance functions assuming that firms operate subject to rate-of-return regulation. To this end, we consider two different contexts. First, we assume that input prices are known, which allows us to extend the rate of return regulated version of Farrell efficiency. Secondly, we assume that input prices are unknown, showing then that a specific reference direction arises as a natural choice for measuring efficiency with directional distance functions.

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