Premium
Efficiency measures for retail fertilizer dealers
Author(s) -
Preckel Paul V.,
Akridge Jay T.,
Boland Michael A.
Publication year - 1997
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/(sici)1520-6297(199709/10)13:5<497::aid-agr4>3.0.co;2-1
Subject(s) - inefficiency , revenue , profit maximization , maximization , economics , profit (economics) , econometrics , variable cost , nonparametric statistics , minification , variable (mathematics) , microeconomics , mathematics , mathematical optimization , computer science , mathematical analysis , accounting
An application of tests of economically rational behavior by fertilizer retailers is presented. Tests are developed to measure efficiency of variable cost minimization, revenue maximization, and profit maximization. These tests include standard linear programming‐based nonparametric efficiency tests and simpler but less conclusive tests which are performed using only simple arithmetic. Results indicate that fertilizer retailers act as variable cost minimizers, but not as revenue and profit maximizers. Additional tests isolate whether inefficiency in cost minimization is due to a perception of variable input fixity. Management can then take steps to focus efforts on input control. © 1997 John Wiley & Sons, Inc.