SSE/EFI Working Paper Series in Economics and Finance
Rolf Färe, Shawna Grosskopf and Pontus Roos
Integrating Consumer satisfaction into Productivity Indexes
Abstract: The purpose of this paper is to include consumer
satisfaction in the specification of productivity. We accomplish this by
using Shephard’s preference indirect distance function to model technology
subject to a utility target. The utility constraint allows us to include
information on consumer satisfaction. The preference indirect distance
function is then used to construct a Malmquist type of productivity index.
As with the usual Malmquist productivity index, we can decompose
productivity change into changes in technology and changes in efficiency.
In addition, we show how to derive a quality change component. The
technique is illustrated by an application to Swedish pharmacies.
Keywords: Productivity; quality; consumer satisfaction; utility indirect input distance function; Malmquist index; (follow links to similar papers)
JEL-Codes: D24; (follow links to similar papers)
15 pages, December 1996
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