IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v128y2024ics0305048324000835.html
   My bibliography  Save this article

Incorporating demand constraints into piecewise frontier models of public service provision

Author

Listed:
  • Nguyen, Hong Ngoc
  • O’Donnell, Christopher

Abstract

Evaluating the performance of public service providers is often complicated by the fact that they must choose input levels before demands for their services are known. We consider an even more complicated situation in which service providers have no opportunity to directly influence demands. This means that their predetermined inputs may be more than what is required to meet realised demands. In such cases, conventional measures of revenue efficiency will generally mis-classify rational and efficient managers as inefficient. We develop a more appropriate measure of revenue efficiency that accounts for exogenously-determined demands. We explain how data envelopment analysis (DEA) methods can be used to estimate our measure. The methodology is applied to hospital and health service networks in Queensland (Australia). We find that most of these networks were able to maximise the revenue they could obtain from their predetermined inputs.

Suggested Citation

  • Nguyen, Hong Ngoc & O’Donnell, Christopher, 2024. "Incorporating demand constraints into piecewise frontier models of public service provision," Omega, Elsevier, vol. 128(C).
    • Handle: RePEc:eee:jomega:v:128:y:2024:i:c:s0305048324000835
    DOI: 10.1016/j.omega.2024.103117
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305048324000835
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.omega.2024.103117?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mitropoulos, Panagiotis & Talias, Μichael A. & Mitropoulos, Ioannis, 2015. "Combining stochastic DEA with Bayesian analysis to obtain statistical properties of the efficiency scores: An application to Greek public hospitals," European Journal of Operational Research, Elsevier, vol. 243(1), pages 302-311.
    2. Witte, Kristof De & Geys, Benny, 2011. "Evaluating efficient public good provision: Theory and evidence from a generalised conditional efficiency model for public libraries," Journal of Urban Economics, Elsevier, vol. 69(3), pages 319-327, May.
    3. Keh, Hean Tat & Chu, Singfat & Xu, Jiye, 2006. "Efficiency, effectiveness and productivity of marketing in services," European Journal of Operational Research, Elsevier, vol. 170(1), pages 265-276, April.
    4. Bradley, Steve & Johnes, Geraint & Millington, Jim, 2001. "The effect of competition on the efficiency of secondary schools in England," European Journal of Operational Research, Elsevier, vol. 135(3), pages 545-568, December.
    5. Dyson, R. G. & Allen, R. & Camanho, A. S. & Podinovski, V. V. & Sarrico, C. S. & Shale, E. A., 2001. "Pitfalls and protocols in DEA," European Journal of Operational Research, Elsevier, vol. 132(2), pages 245-259, July.
    6. Golany, B & Roll, Y, 1989. "An application procedure for DEA," Omega, Elsevier, vol. 17(3), pages 237-250.
    7. Nguyen, Hong Ngoc & O’Donnell, Christopher, 2023. "Estimating the cost efficiency of public service providers in the presence of demand uncertainty," European Journal of Operational Research, Elsevier, vol. 309(3), pages 1334-1348.
    8. Hanson, Torbjørn, 2019. "Estimating output mix effectiveness: An applied scenario approach for the Armed Forces," Omega, Elsevier, vol. 83(C), pages 39-49.
    9. Sahoo, Biresh K. & Mehdiloozad, Mahmood & Tone, Kaoru, 2014. "Cost, revenue and profit efficiency measurement in DEA: A directional distance function approach," European Journal of Operational Research, Elsevier, vol. 237(3), pages 921-931.
    10. Johnes, Jill, 2006. "Measuring teaching efficiency in higher education: An application of data envelopment analysis to economics graduates from UK Universities 1993," European Journal of Operational Research, Elsevier, vol. 174(1), pages 443-456, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hong Ngoc Nguyen & Christopher O’Donnell, 2022. "Estimating the Revenue Efficiency of Public Service Providersin the Presence of Demand Constraints," CEPA Working Papers Series WP032022, School of Economics, University of Queensland, Australia.
    2. Minh‐Anh Thi Nguyen & Ming‐Miin Yu, 2020. "Decomposing the operational efficiency of major cruise lines: A network data envelopment analysis approach in the presence of shared input and quasi‐fixed input," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1501-1516, December.
    3. Vladimír Holý, 2022. "The impact of operating environment on efficiency of public libraries," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(1), pages 395-414, March.
    4. Liu, John S. & Lu, Louis Y.Y. & Lu, Wen-Min & Lin, Bruce J.Y., 2013. "A survey of DEA applications," Omega, Elsevier, vol. 41(5), pages 893-902.
    5. Wijesiri, Mahinda & Yaron, Jacob & Meoli, Michele, 2017. "Assessing the financial and outreach efficiency of microfinance institutions: Do age and size matter?," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 63-76.
    6. Tavana, Madjid & Ebrahimnejad, Ali & Santos-Arteaga, Francisco J. & Mansourzadeh, Seyed Mehdi & Matin, Reza Kazemi, 2018. "A hybrid DEA-MOLP model for public school assessment and closure decision in the City of Philadelphia," Socio-Economic Planning Sciences, Elsevier, vol. 61(C), pages 70-89.
    7. Bădin, Luiza & Daraio, Cinzia & Simar, Léopold, 2019. "A bootstrap approach for bandwidth selection in estimating conditional efficiency measures," European Journal of Operational Research, Elsevier, vol. 277(2), pages 784-797.
    8. Esteve, Miriam & Aparicio, Juan & Rodriguez-Sala, Jesus J. & Zhu, Joe, 2023. "Random Forests and the measurement of super-efficiency in the context of Free Disposal Hull," European Journal of Operational Research, Elsevier, vol. 304(2), pages 729-744.
    9. Mohammad Nourani & Wen‐Min Lu & Irene Wei Kiong Ting, 2020. "Vicarious warfare and dynamic efficiency of companies in the aerospace and defence industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 641-650, June.
    10. Lin, Rung-Chuan & Sir, Mustafa Y. & Pasupathy, Kalyan S., 2013. "Multi-objective simulation optimization using data envelopment analysis and genetic algorithm: Specific application to determining optimal resource levels in surgical services," Omega, Elsevier, vol. 41(5), pages 881-892.
    11. Cordero Ferrera, Jose Manuel & Alonso Morán, Edurne & Nuño Solís, Roberto & Orueta, Juan F. & Souto Arce, Regina, 2013. "Efficiency assessment of primary care providers: A conditional nonparametric approach," MPRA Paper 51926, University Library of Munich, Germany.
    12. Gulati, Rachita & Charles, Vincent & Kumar, Sunil, 2024. "School education development index: A meta-frontier range directional measure benefit-of-the-doubt model," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    13. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
    14. Marwa Hasni & Safa Bhar Layeb & Najla Omrane Aissaoui & Aymen Mannai, 2022. "Hybrid model for a cross‐department efficiency evaluation in healthcare systems," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1311-1329, July.
    15. Kristof De Witte & Laura López-Torres, 2017. "Efficiency in education: a review of literature and a way forward," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(4), pages 339-363, April.
    16. Syrjanen, Mikko J., 2004. "Non-discretionary and discretionary factors and scale in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 158(1), pages 20-33, October.
    17. Price, Juan José & Gómez-Lobo, Andrés, 2021. "Baumol’s cost disease and urban transport services in Latin America," Transportation Research Part A: Policy and Practice, Elsevier, vol. 149(C), pages 206-225.
    18. Guccio, Calogero & Mignosa, Anna & Rizzo, Ilde, 2018. "Are public state libraries efficient? An empirical assessment using network Data Envelopment Analysis," Socio-Economic Planning Sciences, Elsevier, vol. 64(C), pages 78-91.
    19. Lu, Wen-Min & Wang, Wei-Kang & Hung, Shiu-Wan & Lu, En-Tzu, 2012. "The effects of corporate governance on airline performance: Production and marketing efficiency perspectives," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 529-544.
    20. Akkan, Can & Karadayi, Melis Almula & Ekinci, Yeliz & Ülengin, Füsun & Uray, Nimet & Karaosmanoğlu, Elif, 2020. "Efficiency analysis of emergency departments in metropolitan areas," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:128:y:2024:i:c:s0305048324000835. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.