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- Title
Primal and dual multi-output flexibility measures.
- Authors
Renner, Swetlana; Glauben, Thomas; Hockmann, Heinrich; Ouellette, Pierre
- Abstract
Flexibility is a crucial component of competitive advantage, especially under conditions of dynamically changing environments. In this theoretical paper, we present alternative flexibility measures that can be used to calculate the ability of the production technology to accommodate output variations at lower costs. We refine the existing short-run multi-output flexibility measure to the long-run using three alternative total cost functions in order to capture the impact of fixed costs on adjustment ability. The proposed new long-run flexibility measures are based on alternative definitions of the long-run total cost function considering various assumptions about the decision-making process. We derive primal flexibility measures by using the dual relationships between these cost functions and the corresponding input distance functions. The proposed measures allow us to investigate both short-run and long-run flexibility using different representations of the production technology, and thus to examine various aspects of the firm's ability to adjust.
- Subjects
INDUSTRIAL costs; DECISION making in international relations; TECHNOLOGICAL innovations; ECONOMIC competition; INDUSTRIAL productivity
- Publication
Journal of Productivity Analysis, 2015, Vol 44, Issue 2, p127
- ISSN
0895-562X
- Publication type
Article
- DOI
10.1007/s11123-015-0449-8