Ranking Production Units According to Marginal Efficiency Contribution

Mojtaba Ghiyasi and Jens Leth Hougaard ()
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Mojtaba Ghiyasi: Centre of Health Economics Research, University of Southern Denmark
Jens Leth Hougaard: Department of Food and Resource Economics, University of Copenhagen

No 04_2014, MSAP Working Paper Series from University of Copenhagen, Department of Food and Resource Economics

Abstract: League tables associated with various forms of service activities from schools to hospitals illustrate the public need for ranking institutions by their productive performance. We present a new method for ranking production units which is based on each units marginal contribution to the technical efficiency of various “mergers” relative to a common reference technology. The approach is radically different from the usual one based on super-efficiency indexes in DEA. We illustrate the mechanics of our method by a series of numerical examples and further demonstrate that our new index inherits all relevant and desirable properties of the Farrell efficiency index upon which it is constructed.

Keywords: Production units; Ranking; Marginal efficiency contribution; DEA; Super efficiency; Contribution index (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014-08
New Economics Papers: this item is included in nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:foi:msapwp:04_2014

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