Comparing TFP Catching-up and Capital Deepening in US and European Growths: A Directional Distance Function Approach

In Solow’s model the income convergence between countries arises from two main sources: a capital deepening effect resulting from the diminishing returns of the production technology and a technological transfer/diffusion effect related to Total Factor Productivity (TFP) differences. A large literature has been devoted to analyze these effects but most of the studies suffer from three weaknesses by defining the US as the a priori technological leader, by using a parametric functional form and by assuming constant returns to scale for the technology. Our paper offers an alternative approach based on a non-parametric programming framework and the estimation of directional distance functions. We explicitly separate country TFP differences into two components: a technology effect and a scale effect to study the catching-up process on each of them. We also analyze the role of the capital deepening effect by introducing a relevant measure of the structural efficiency which reveals inefficiencies due to changes in input-ratio differences. Our empirical work focuses on 15 European countries (EU) and the US over the period 1980-2004. We use time series procedures to test for convergence for individual countries or sub-sets of countries.TFP Catching-up, Capital Deepening, Convergence, Directional Distance Function. Running title: Comparing TFP Catching-up and Capital Deepening

How Does Payer Mix and Technical Inefficiency Affect Hospital Net Revenue?

As changes in the US health care system continue to evolve and change, maintaining the financial viability of hospitals is crucial to the system’s operation. Two lines of inquiry have been pursued in describing factors affecting financial viability. The first line of inquiry relates to the external payer mix of patients focusing on patients who are unable to compensate hospitals for the care received. The second line of inquiry focuses on internal management and because hospitals do not typically answer to shareholders, managers become lax and X-inefficiency may arise. In this paper, we assess both these lines of research in order to determine if payment source by patients and/or managerial efficiency contributes to higher total net revenue. By using a weighted DEA we measured the inefficiency of inputs to the production process on our sample of 144 hospitals operating in Florida during 2005. We used the derived inefficient use of inputs along with the number of days by payer group (Medicare, Medicaid, private insurance, other public insurance, and uncompensated care) in order to explain their effects on total net revenue. To preview our results, we found that the inefficient use of beds and the provision of care to patients who are considered as uncompensated care reduce significantly total net revenue while private pay patients and patients covered by other public insurance add to total net revenue. These findings add to the literature by showing that it is patient payer mix and managerial inefficiency together affect hospital financial viability. We also demonstrate how our findings contribute to current policy debates both on the federal US and the state of Florida level.Hospital, Net Revenue, Efficiency, Payer, Uncompensated Care

Optimal productive size of hospital’s intensive care units

Hospital, Intensive Care Units, Returns to Scale, Optimal Size

Technical and economic efficiency measures under short run profit maximizing behavior

The duality between measures of economic and technical efficiency has been extensively studied in the productive efficiency analysis. This duality ensures a meaningful interpretation of technical efficiency as economic efficiency evaluated at the most favorable shadow prices. This paper concentrates on economic efficiency as short run profit efficiency. We first argue that a modified version of Varian’s goodness-of-fit measure provides an appropriate economic efficiency measure in that context. Next, we show that a variant of the McFadden gauge function provides a natural dual efficiency measure for this short run profit efficiency measure. In particular, we establish two attractive properties of that technical efficiency measure: (i) it can be interpreted as Varian’s profit efficiency measure evaluated at shadow prices; (ii) it provides an upper bound for profit efficiency.Profit Efficiency, Technical Efficiency, Technology Distance Functions

Could Society’s willingness to reduce pesticide use be aligned with Farmers’ economic self-interest?

agricultural intensification (AI), agricultural extensification (AE), pesticide reduction, environmental performance, non parametric cost-functions

Linear programming solutions and distance functions under a constant returns to scale technology

This note generalizes analytical relationships among activity variables of DEA models previously derived by Boussemart, Briec and Leleu (2007). We relax the asumption of constant returns to scale by showing that the key results hold under a weaker asumption of homogeneity. We use the notion of alpha-returns to scale to extend the analysis to strictly increasing and decreasing returns, covering now the whole range of returns to scale for multi-output homogenous technologies.Data envelopment analysis, Methodology, Production

Comparing French and US hospital technologies: a directional input distance function approach

French and US hospital technologies are compared using directional input distance functions. The aggregation properties of the directional distance function allow comparison of hospital industry-level performance as well as standard firm-level performance with regard to productive efficiency. In addition, the underlying constituents of efficiency - in the short run, congestion and technical inefficiency, and in the long run, scale inefficiency - are analysed by decomposing the overall measure. By virtue of using the directional distance function, it is also possible to obtain an estimate of a lower bound on allocative inefficiency. It is found that French and US hospitals use quite different technologies. Long run scale inefficiencies cause most of the French hospitals' inefficiency, while short run technical inefficiency is the main source of overall productive inefficiency in the US hospitals

The Size and Service Offering Efficiencies of U.S. Hospitals.

Hospital productivity has been a research topic for over two decades. We expand on this research to include measures of dis/economies of scope. By using the Free Coordination Hull (FCH) we are able to determine if hospitals in our sample can become more efficient if they provide more services (diseconomies of scope) or if two smaller hospitals with a reallocation of resources could become more efficient (economies of scope). Using data from the American Hospital Association for the years 2004-2007, we found variations among hospital markets (measured by the Core Based Statistical Area). We can determine whether dis/economies of scope exist by comparing the results from two linear programming problems. Focusing on four markets: Los Angeles, Philadelphia, Madison, WI, and New Orleans we found variations in how best these hospitals operating in these markets could change in order to increase both scale and scope efficiencies. This approach could be used by policy makers and managers in order to reduce costs by sharing, reducing, or expanding services in hospitals. Findings from a study such as this should aid reform programs by providing more information on the sources of hospital inefficiency.Hospital, Efficiency, Economies of Scope, Hospital Markets

Hospital's activity-based financing system and manager - physician interaction

Hospital financing systems determine major decisions made by physicians and managers within hospitals. This paper examines the impact of the transition toward an activity-based reimbursement system that has emerged in most OCDE countries. We consider two initial situations, one for a private for-profit sector where both hospitals and physicians are paid on a fee-for-service basis and the other for a public sector under prospective budget and salaried physicians. For the private sector, our model focuses on the type of interaction (simultaneous, sequential or joint decision-making games) that should emerge between agents after the indroduction of the activity-based financing system. In the public sector, the elasticity of the demand to the level of inputs seems to play a more crucial rôle in the transition

Efficiency of purchasing and selling agents in markets with quality uncertainty: The case of illicit drug transactions

illicit drug markets, quality uncertainty, efficient transactions