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Nonparametric estimates of price efficiency for the Greek infant milk market: Curing the curse of dimensionality with shannon entropy

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  • Karagiannis, Roxani
  • Karagiannis, Giannis
Abstract
Despite the continuous promotion of breastfeeding by the World Health Organization and national health systems, the consumption of breast milk substitutes (BMS) is increasing. Several BMS brands in the market have varying prices and attributes (i.e., energy, protein, vitamins, minerals, etc.). Using data from Greece, we examine which of these are “value for money” choices and which are overpriced relative to their number of attributes. For this purpose, we estimate their price efficiency using data envelopment analysis, where the discrimination power hinges on the curse of dimensionality. To cope with this, we propose a novel use of Shannon's entropy for pre-aggregating vitamin and mineral items. Our empirical results indicate that most of the considered brands are overpriced relative to their number of attributes. This result is more severe for the infant formulae brands than the follow-on formulae, the growing-up milk brands, and brands with higher prices.

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  • Karagiannis, Roxani & Karagiannis, Giannis, 2023. "Nonparametric estimates of price efficiency for the Greek infant milk market: Curing the curse of dimensionality with shannon entropy," Economic Modelling, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:ecmode:v:121:y:2023:i:c:s0264999323000147
    DOI: 10.1016/j.econmod.2023.106202
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    More about this item

    Keywords

    Infant milk products; Price efficiency; DEA; Curse of dimensionality; Shannon's entropy;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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