Direct targeting of efficient DMUs for benchmarking

Jens Krüger ()

No 229, Darmstadt Discussion Papers in Economics from Darmstadt University of Technology, Department of Law and Economics

Abstract: We propose a two-stage procedure for finding realistic benchmarks for nonparametric efficiency analysis. On the first stage the efficient DMUs are figured out by a free disposal hull approach. These benchmarks are directly targeted by directional distance functions and the extent of inefficiency is measured along the direction towards an existing DMU. Two variants for finding the closest or the furthest benchmark are proposed. With this approach there is no need to use linear combinations of existing DMUs as benchmarks which may not be achievable in reality and also no need to accept slacks which are not reflected by the efficiency measure.

Keywords: directional distance functions; targeting; direct benchmarks (search for similar items in EconPapers)
JEL-codes: C14 D24 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ecm and nep-eff
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Journal Article: Direct targeting of efficient DMUs for benchmarking (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:darddp:229

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