Allocative efficiency measurement revisited--Do we really need input prices?

Oleg Badunenko, Michael Fritsch () and Andreas Stephan

Economic Modelling, 2008, vol. 25, issue 5, 1093-1109

Abstract: The traditional approach to measuring allocative efficiency exploits input prices, which are rarely known at the firm level. This paper proves allocative efficiency can be measured as a profit-oriented distance to the frontier in a profit-technical efficiency space. This new approach does not require information on input prices. To validate the new approach, we perform a Monte-Carlo experiment providing evidence that the estimates of allocative efficiency employing the new and the traditional approach are highly correlated. Finally, as an illustration, we apply the new approach to a sample of about 900 enterprises from the chemical manufacturing industry in Germany.

Date: 2008
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Allocative Efficiency Measurement Revisited: Do We Really Need Input Prices? (2006)
Working Paper: Allocative efficiency measurement revisited: Do we really need input prices? (2006)
Working Paper: Allocative efficiency measurement revisited: do we really need input prices? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:25:y:2008:i:5:p:1093-1109

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