Quality Production and Quality Indicators in Intermediate Products

The paper proposes a methodology to measure the characteristics of intermediate products when quality is multidimensional. It uses a general representation of the multioutput technology via directional distance functions and constructs quality indicators based on differences. The quality indicators may be used to evaluate firms’ output taking into account the whole set of quality attributes. It explores the relationships among the different quality attributes and the yields by a systematic investigation of the disposability properties of the technology. In addition, it shows how aggregate quality may vary with the production level.