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Product mixes as objects of choice in nonparametric efficiency measurement

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  • Laurens Cherchye
  • Tom Vanpuyenbroeck

Abstract

Non-radial measures of technical efficiency essentially differ from their radial counterparts in that the product mix of the efficient reference is allowed to be different from the product mix of the evaluated observation. Whereas existing non-radial measures are still based on the product mix of the evaluated, i.e. possibly inefficient observation, we change the perspective and propose a measure based on the mix properties of the efficient reference. The resulting `inverse' measure can be considered as complementary to the Färe-Lovell (or "Russell") efficiency measure.

Suggested Citation

  • Laurens Cherchye & Tom Vanpuyenbroeck, 1999. "Product mixes as objects of choice in nonparametric efficiency measurement," Public Economics Working Paper Series ces9901, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    • Handle: RePEc:wpe:papers:ces9901
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    References listed on IDEAS

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    1. KERSTENs, Kris & VANDEN EECKAUT, Philippe, 1995. "Technical Efficiency Measures on DEA and FDH : A Reconsideration of the Axiomatic Literature," LIDAM Discussion Papers CORE 1995013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Henry Tulkens, 2006. "On FDH Efficiency Analysis: Some Methodological Issues and Applications to Retail Banking, Courts and Urban Transit," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 311-342, Springer.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. Robert Russell, R., 1985. "Measures of technical efficiency," Journal of Economic Theory, Elsevier, vol. 35(1), pages 109-126, February.
    5. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
    6. Zieschang, Kimberly D., 1984. "An extended farrell technical efficiency measure," Journal of Economic Theory, Elsevier, vol. 33(2), pages 387-396, August.
    7. Russell, R. Robert, 1985. "On the Axiomatic Approach to the Measurement of Technical Efficiency," Working Papers 85-33, C.V. Starr Center for Applied Economics, New York University.
    8. Charnes, A. & Cooper, W. W. & Rhodes, E., 1979. "Measuring the efficiency of decision-making units," European Journal of Operational Research, Elsevier, vol. 3(4), pages 339-338, July.
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    Cited by:

    1. Laurens Cherchye & Tom Van Puyenbroeck, 1999. "A Shadow Price Approach to Technical Efficiency Measurement," Public Economics Working Paper Series ces9924, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    2. J. Vakili & R. Sadighi Dizaji, 2021. "The closest strong efficient targets in the FDH technology: an enumeration method," Journal of Productivity Analysis, Springer, vol. 55(2), pages 91-105, April.
    3. Hirofumi Fukuyama & Hiroya Masaki & Kazuyuki Sekitani & Jianming Shi, 2014. "Distance optimization approach to ratio-form efficiency measures in data envelopment analysis," Journal of Productivity Analysis, Springer, vol. 42(2), pages 175-186, October.
    4. Javad Vakili & Hanieh Amirmoshiri & Rashed Khanjani Shiraz & Hirofumi Fukuyama, 2020. "A modified distance friction minimization approach in data envelopment analysis," Annals of Operations Research, Springer, vol. 288(2), pages 789-804, May.
    5. Cherchye, Laurens & Van Puyenbroeck, Tom, 2009. "Semi-radial technical efficiency measurement," European Journal of Operational Research, Elsevier, vol. 193(2), pages 616-625, March.
    6. Halická, Margaréta & Trnovská, Mária, 2018. "The Russell measure model: Computational aspects, duality, and profit efficiency," European Journal of Operational Research, Elsevier, vol. 268(1), pages 386-397.
    7. Maria Silva Portela & Pedro Borges & Emmanuel Thanassoulis, 2003. "Finding Closest Targets in Non-Oriented DEA Models: The Case of Convex and Non-Convex Technologies," Journal of Productivity Analysis, Springer, vol. 19(2), pages 251-269, April.
    8. Laurens Cherchye & Tom Van Puyenbroeck, 2001. "Technical Efficiency Evaluation: Naturally Dual!," Public Economics Working Paper Series wptchff, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.

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