Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/204427 
Year of Publication: 
2018
Series/Report no.: 
IFRO Working Paper No. 2018/10
Publisher: 
University of Copenhagen, Department of Food and Resource Economics (IFRO), Copenhagen
Abstract: 
Consisting of the difference between an output indicator and an input indicator, the Luenberger-Hicks-Moorsteen (LHM) productivity indicator allows straightforward interpretation. However, it requires estimation of distance functions that are inherently unknown. This paper shows that a simple Bennet profit indicator is a superlative approximation of the LHM indicator when one can assume profit-maximizing behavior and the input and output directional distance functions can be represented up to the second order by a quadratic functional form. We also show that the Luenberger and LHM-approximating Bennet indicators coincide for an appropriate choice of the directional vectors. Focusing on a large sample of Italian food and beverages companies for the years 1995-2007, we empirically investigate the extent to which this theoretical equivalence translates into similar estimates.
Subjects: 
Productivity and competitiveness
Bennet
Luenberger-Hicks-Moorsteen
superlative approximation
Italian food and beverages sector
JEL: 
C43
D21
D22
D24
Document Type: 
Working Paper

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