Symmetric decompositions of cost variation

In this paper a number of symmetric, empirically implementable decompositions of the cost variation (in difference and ratio form) of a production unit are developed. The components distinguished are price level change, technical efficiency change, allocative efficiency change, technological change, scale of activity change, and price structure change. Given data from a (balanced) panel of production units, all the necessary ingredients for the computation of the various decompositions can be obtained by using linear programming techniques (DEA). An application is provided

A trade hierarchy of cities based on transport cost thresholds

Empirical evidence is lagging behind in explaining trade agglomerations in short distances. Departing from a novel micro-database on road freight shipments within Spain for the period 2003-2007, we decompose cities (municipal) trade flows into the extensive and intensive margins to assess trade frictions and trade concentration by way of a unique generalized transport cost measure and three internal borders, NUTS-5 (municipal), NUTS-3 (provincial) and NUTS-2 (regional). We discover a stark accumulation of trade flows up to a transport cost value of e189 (170km approx.) and conclude that this high density is not explained by the existence of administrative borders effects but to significant changes in the trade-to-transport costs relationship. To support this hypothesis, we propose and adopt an endogenous Chow test to identify significant thresholds at which trade flows change structurally with distance. These breakpoints allow us to split the sample when controlling for internal borders, and define trade market areas corresponding to specific transport costs values that consistently portrait an urban hierarchical system of cities, thereby providing clear evidence of the predictions made by the central place theory.JRC.B.3 - Territorial Developmen

A new frontier approach to model the eco-efficiency in European countries

This study aims to evaluate the resource and environment efficiency problem of European countries. We specify a new stochastic frontier model where Gross Domestic Product (GDP) is considered as the desirable output and Greenhouse Gases (GHG) emissions as the undesirable output. Capital, Labour, Fossil fuels and Renewable Energy consumption are regarded as inputs. GDP/GHG ratio is maximized given the values of the other four variables. The study is divided into two distinct periods: 2000-2004 and 2005-2011. This division is related to the implementation of the Kyoto Protocol in 2005, and will allow us to evaluate the difference between the levels of efficiency before and after the establishment of environmental targets. Since stochastic frontier models are typically ill-posed, a new maximum entropy approach to assess technical efficiency, which combines information from the data envelopment analysis and the structure of composed error from the stochastic frontier approach without requiring distributional assumptions, is presented in this work

Is eco-efficiency in greenhouse gas emissions converging among European Union countries?

Eco-efficiency refers to the ability to produce more goods and services with less impact on the environment and less consumption of natural resources. This issue has become a matter of concern that is receiving increasing attention from politicians, scientists and researchers. Furthermore, greenhouse gases emitted as a result of production processes have a marked impact on the environment and are also the foremost culprit of global warming and climate change. This paper assesses convergence in eco-efficiency in greenhouse gas emissions in the European Union. Eco-efficiency is assessed at both country and greenhouse-gas-specific levels using Data Envelopment Analysis techniques and directional distance functions, as recently proposed by Picazo-Tadeo et al. (Eur J Oper Res, 220:798–809, 2012). Convergence is then evaluated using the Phillips and Sul (Econometrica, 75:1771–1855, 2007) approach that allows testing for the existence of convergence groups. Although the results point to the existence of different convergence clubs depending on the specific pollutant considered, they signal the existence of at least four clear groups of countries. The first two groups are core European Union high-income countries (Benelux, Germany, Italy, Austria, the United Kingdom and Scandinavian countries). A third club is made up of peripheral countries (Spain, Ireland, Portugal and Greece) together with some Eastern countries (Latvia and Slovenia), while the remaining clubs consist of groups containing Eastern European countries

Evaluating productive performance: A new approach based on the product-mix problem consistent with Data Envelopment Analysis

We propose a new approach to estimate technical coefficients from a set of Decision Making Units (DMUs) under the assumption that their production plans are set by process engineers through Linear Programming (LP) techniques. The idea behind thi

A toolbox for calculating and decomposing Total Factor Productivity indices

Total Factor Productivity Toolbox is a new set of functions to calculate the main Total Factor Productivity (TFP) indices and their decompositions, based on Shephard's distance functions, and using Data Envelopment Analysis (DEA) programming techniques. The package includes code for the standard Malmquist, Moorsteen–Bjurek, price-weighted and share-weighted TFP indices, allowing for the choice of orientation (input or output), reference period (base, comparison, geometric mean), returns to scale (variable or constant), and specific decompositions (aggregate, or identifying scale effects, as well as input and output mix effects). Classic definitions of TFP corresponding to the Laspeyres, Paasche, Fisher, or Törnqvist formulas can also be calculated as particular cases. This paper describes the methodology and implementation of the productivity functions in MATLAB. We compare the results corresponding to the different definitions by studying productivity trends in the US agriculture at the individual state level

Neighbors' income, public goods, and well‐being

How does neighbors' income affect individual well‐being? Our analysis is based on rich U.S. local data from the Behavioral Risk Factor Surveillance System, which contains information on where respondents live and their self‐reported well‐being. We find that the effect of neighbors' income on individuals' self‐reported well‐being varies with the size of the neighborhood included. In smaller areas such as ZIP codes, we find a positive relationship between median income and individuals' life satisfaction, whereas it is the opposite at the county, MSA, and state levels. We provide evidence that local public goods and local area characteristics such as unemployment, criminality, and poverty rates drive the association between satisfaction and neighbors' income at the ZIP code level. The neighbors' income effects are mainly concentrated among poorer individuals and are as large as one quarter of the effect of own income on self‐reported well‐being