Talk:Profit (economics)/Archives/2016
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Dr. Kuosmanen's comment on this article
Dr. Kuosmanen has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:
Section "Government intervention"
I would propose to add the following text on yardstick competition: If there are multiple local monopolies (for example, electricity, gas, and water distribution networks), government can set up a virtual market known as "yardstick competition" (Shleifer, 1985). Shleifer shows that the regulator can achieve the social optimum in the case of yardstick competition among identical firms. In practical applications of yardstick competition, the main challenge is to account for heterogeneity of firms and their operating environments. Many regulators use frontier estimation techniques such as data envelopment analysis to estimate the cost function under heterogeneity (e.g., Haney and Pollit, 2009; Bogetoft and Otto, 2011; Kuosmanen et al., 2013)
"Other applications of the term" Correction: Profitability is a term of economic efficiency, closely related to total productivity. Mathematically it is a relative index – a fraction with total revenue as numerator and total revenue as denominator (Althin et al., 1996). Kuosmanen and Sipiläinen (2009) show that profitability change is equal to TFP change and a price deflator.
References
Althin R, Färe R, Grosskopf S (1996) Profitability and productivity changes: an application to Swedish pharmacies. Ann Oper Res 66:219–230.
Bogetoft, P., Otto, L., 2011. Benchmarking with DEA, SFA, and R. International Series in Operations Research & Management Science, 157. Springer.
Haney, A.B., Pollitt, M., 2009. Efficiency analysis of energy networks: an international survey of regulators. Energy Policy 37, 5814–5830.
Kuosmanen, T., Saastamoinen, A., Sipiläinen, T., 2013.What is the best practice for benchmark regulation of electricity distribution? Comparison of DEA, SFA and StoNED methods. Energy Policy 61, 740–750.
Kuosmanen, T., and T. Sipiläinen 2009. Exact Decomposition of the Fisher Ideal Total Factor Productivity Index, Journal of Productivity Analysis 31(3), 137-150.
Shleifer, A., 1985. A theory of yardstick competition. RAND J. Econ. 16 (3), 319–327.
We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.
Dr. Kuosmanen has published scholarly research which seems to be relevant to this Wikipedia article:
- Reference : Timo Kuosmanen & Mika Kortelainen & Timo Sipilainen & Laurens Cherchye, 2005. "Firm and Industry Level Profit Efficiency Analysis Under Incomplete Price Data: A Nonparametric Approach based on Absolute and Uniform Shadow Prices," Microeconomics 0509011, EconWPA.