 Decomposition and aggregation of tone efficienciesOmega, 2023, vol. 119, issue C Abstract: In this paper we investigate the decomposition and aggregation of cost efficiencies when input prices vary across decision-making units. In particular, we compare and contrast four alternative decompositions, three of which are compatible with non-homogeneous (in terms of quality) inputs. We also examine the relations among the alternative cost efficiency measures and their components. Our theoretical results indicate that, when input prices vary across decision-making units, the Färe and Grosskopf cost-based efficiency measure is equal to (i) the Tone cost efficiency measure; (ii) the Tone and Tsutsui cost efficiency measure if there is no technical inefficiency; and (iii) the input spending efficiency measure if there is no allocative inefficiency in the sense of Tone. In addition, based on the denominator rule, we derive appropriate weights for aggregating consistently these cost efficiencies and their components across decision-making units. All these provide helpful guidelines for the appropriate applications of these decompositions at both the individual and the aggregate level. We illustrate this by a simple study case for hospitals. Keywords: DEA; Cost efficiency decomposition; Varying across decision-making units input prices; Share-weighting aggregation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:119:y:2023:i:c:s0305048323000543 Ordering information: This journal article can be ordered from DOI: 10.1016/j.omega.2023.102890 Access Statistics for this article Omega is currently edited by B. Lev More articles in Omega from Elsevier |
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