Cost and productivity
Grifell-Tatjé, Emili (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa)
Lovell, C. A. Knox (University of Georgia. Department of Economics)

Date:	2000
Abstract:	We develop an analytical model capable of decomposing both intertemporal and multilateral cost variation. We begin by attributing cost variation to a price effect and a quantity effect. We then decompose the quantity effect into a productivity effect and an activity effect. The productivity effect in turn decomposes into a cost efficiency effect and, in the intertemporal context, a technical change effect. We also show how the intertemporal and multilateral cost decompositions can be implemented, using linear programming techniques. These techniques offer certain advantages over conventional econometric techniques whenever a substantial portion of cost variation is due to variation in cost efficiency. We illustrate the two cost decompositions with a pair of benchmarking exercises based on a panel of 93 US electric power generating companies, in which variation in cost efficiency does play a key role.
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Language:	Anglès
Document:	Article ; recerca ; Versió acceptada per publicar
Subject:	Cost ; Productivity ; Benchmarking ; Electricity generation
Published in:	Managerial and decision economics, Vol. 21 Núm. 1 (2000) , p. 19-30, ISSN 0143-6570

DOI: 10.1002/1099-1468(200001/02)21:1<19::AID-MDE962>3.0.CO;2-7

Postprint 21 p, 131.6 KB

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