Distance Functions
Rolf G. Färe, Shawna Grosskopf, Dimitris Margaritis · World Scientific-Now Publishers series in business · 2019
In Chapter 2 and the appendix, we focused on set representations of technology and the minimal set of axioms required for us to take advantage of the duality between input and output quantities which constitute our technology sets and their dual prices. Our pricing models make use of calculus, which takes us from quantity to price space; however, calculus is not readily defined for the technology sets we have introduced in Chapter 2. To take advantage of calculus we need a function representation of those technology sets, which is the topic of this chapter. The functions we introduce are distance functions, which are generalizations of the notion of a production function, but without being limited to a single output…