PROFIT, DIRECTIONAL DISTANCE FUNCTIONS, AND NERLOVIAN EFFICIENCY

The directional technology distance function is introduced, given an i nterpretation as a min-max, and compared with other functional represe ntations of the technology including the Shephard input and output dis tance functions and the McFadden gauge function. A dual correspondence is developed between the directional technology distance function and the profit function, and it is shown that all previous dual correspon dences are special cases of this correspondence. We then show how Nerl ovian (profit-based) efficiency measures can be computed using the dir ectional technology distance function.