Index Numbers: Essays in Honour of Sten Malmquist

Professor Sten Malmquist constructed the Malmquist quantity index and in doing so developed a distance function defined on a consumption space. This function is the consumer analog to the Shephard input distance function of producers and is used in ratio

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INDEX NUMBERS: ESSAYS IN HONOUR OF STEN MALMQUIST

EOITEO BY

Rolf Fare Southern Illinois University at Carbondale Carbondale, Illinois 62901



Shawna Grosskopf

Southern Illinois University at Carbondale Carbondale, Illinois 62901



R. Robert Russell

University of California at Riverside Riverside, California

....

"

SPRINGER SCIENCE+BUSINESS MEDIA, LLC

Library of Congress Cataloging-in-Publication Data Index numbers : essays in honor of Sten Malmquist / edited by Rolf Făre, Shawna Grosskopf, R. Robert Russell. p. cm. "Selections of papers presented at the ArDe Ryde Symposium in honor ofProfessor Sten Malmquist, held in Lund on May 28, 1996" --Pref. Includes bibliographical references and index. ISBN 978-94-010-6035-6 ISBN 978-94-011-4858-0 (eBook) DOI 10.1007/978-94-011-4858-0 1. Economics, Mathematical--Congresses. 2. Index numbers (Economics)--Congresses. 1. Malmquist, Sten, 1917- . II. Făre, Rolf, 1942- . III. Grosskopf, Shawna. IV. Russell, R. Robert. V. ArDe Ryde Symposium (1996: Lund, Sweden) HB135.1547 1997 330'.0I'51--dc21 97-38202 CIP

Copyright © 1998 by Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1998 Softcover reprint ofthe hardcover Ist edition 1998 AU rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher, Springer Science+Business Media, LLC.

Printed on acid-free paper.

CONTENTS

Preface

IX

Introduction by Rolf Fare, Shawna Grosskopf and R. Robert Russell

1

ESSAY 1

7

DISTANCE FUNCTIONS IN CONSUMER AND PRODUCER THEORY by R. Robert Russell 1.1 Introduction 7 1.2 Distance-Function Representations of Technologies 10 or Preference Orderings 1.3 Distance Functions as Technical Efficiency Indexes 28 1.4 Duality and the Distance Function 45 64 1.5 Distance Functions and Index Numbers 1.6 Concluding Remarks 84

ESSAY 2

91

INPUT PRICE, QUANTITY, AND PRODUCTIVITY INDEXES FOR A REVENUE-CONTRAINED FIRM by Bert M. Balk

v

VI

2.1 2.2 2.3 2.4 2.5 2.6

Introduction 91 Primal and Dual Direct Representations of the 93 Technology The Indirect Input Distance Function, Cost Function, 99 and Efficiency Measures The Indirect Input Price Index and Quantity Index 104 The Indirect Input Based Productivity Indexes 116 Conclusion 124

ESSAY 3

127

MALMQUIST PRODUCTIVITY INDEXES: A SURVEY OF THEORY AND PRACTICE by Rolf Fare, Shawna Grosskopf and Pontus Roos 3.1 Introduction 127 3.2 Theory 128 3.3 Empirical Applications 151 3.4 Concluding Remarks 175

ESSAY 4

191

IMPLEMENTING THE MALMQUIST PRODUCTIVITY INDEX: THE CASE OF THE NATIONAL CORPORATION OF SWEDISH PHARMACIES by Nils-Olov Norlander and Pontus Roos 4.1 Introduction 191 4.2 Implementation of Malmquist Productivity Indexes 195 4.3 Performance Indicators, Incentives, and Malmquist 206 Indexes 211 4.4 Concluding Remarks

Index Numbers: Essays

ESSAY 5

VII

217

MALMQUIST PRODUCTIVITY INDEXES: AN EMPIRICAL COMPARIS