In this paper a number of meaningful and empirically implementable decom- positions of the cost variation (in difference and ratio form) are developed. The components distinguished are price level change, technical efficiency change, allocative efficiency change, technological change, scale of activity change, and price structure change. Given data from a (balanced) panel of produc- tion units, all the necessary ingredients for the computation of the various decompositions can be obtained by using linear programming techniques. An application is provided.

Additional Metadata
Keywords Cost variation, decomposition, efficiency change, technological change, index number theory
JEL Index Numbers and Aggregation (jel C43), Production; Capital and Total Factor Productivity; Capacity (jel D24), Microeconomic Analyses of Economic Development (jel O12)
Persistent URL hdl.handle.net/1765/116408
Series ERIM Report Series Research in Management
Journal ERIM report series research in management Erasmus Research Institute of Management
Citation
Balk, B.M, & Zofío, J.L. (2019). The Decompositions of Cost Variation (No. ERS-2019-006-LIS). ERIM report series research in management Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/116408