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Measuring Efficiency in Price Space with an Application to Japanese Securities Firms

Measuring Efficiency in Price Space with an Application to Japanese Securities Firms

Rolf Färe, Hirofumi Fukuyama, Shawna Grosskopf, William L. Weber
Copyright: © 2013 |Volume: 4 |Issue: 1 |Pages: 26
ISSN: 1947-9328|EISSN: 1947-9336|EISBN13: 9781466631649|DOI: 10.4018/joris.2013010101
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MLA

Färe, Rolf, et al. "Measuring Efficiency in Price Space with an Application to Japanese Securities Firms." IJORIS vol.4, no.1 2013: pp.1-26. http://doi.org/10.4018/joris.2013010101

APA

Färe, R., Fukuyama, H., Grosskopf, S., & Weber, W. L. (2013). Measuring Efficiency in Price Space with an Application to Japanese Securities Firms. International Journal of Operations Research and Information Systems (IJORIS), 4(1), 1-26. http://doi.org/10.4018/joris.2013010101

Chicago

Färe, Rolf, et al. "Measuring Efficiency in Price Space with an Application to Japanese Securities Firms," International Journal of Operations Research and Information Systems (IJORIS) 4, no.1: 1-26. http://doi.org/10.4018/joris.2013010101

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Abstract

The authors exploit the duality between the directional output price distance function and the maximal revenue function to estimate the price efficiency of Japanese securities firms during 2000 to 2007, a period in which securities firms faced greater competitive pressures. The directional output price distance function gives the maximum feasible addition to output prices, given inputs and a revenue target. Output supply functions are theoretically derived from the directional output price distance function. The model estimates indicate that brokerage services are overproduced relative to underwriting services. In addition, they find that if securities firms were to become more efficient they could increase the prices charged for brokerage services and for underwriting securities, although the amount prices could be increased depends on the directional path used to inflate actual prices to the output price frontier.

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