Note: A Problem with the Decomposition of Technical Inefficiency into Scale and Congestion Components

John McDonald
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John McDonald: Flinders University of South Australia, GPO Box 2100, Adelaide SA 5001, Australia

Management Science, 1996, vol. 42, issue 3, 473-474

Abstract: In 1988, Byrnes, Färe, Grosskopf and Lovell define a decomposition of inefficiency differentials into scale and congestion components. This note shows that the decomposition may be sensitive to the order in which the two components are calculated, and, consequently, use of the decomposition may result in misleading signals being given to management.

Keywords: efficiency; productivity; mathematical programming; data envelopment analysis (search for similar items in EconPapers)
Date: 1996
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