Distance Functions


A distance function is a remarkably simple yet powerful concept. This function underpins nonparametric efficiency analysis, and is also the basis for a nonparametric approach for assessing productivity that we will discuss in Part III. The distance and cost function are linked via two, symmetric identities; knowledge of one function is sufficient to determine the other one.


Cost Function Distance Function Price Vector Supporting Hyperplane Output Distance Function 
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© Springer-Verlag Berlin Heidelberg 2008

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