Productive efficiency analysis with incomplete output information

Laurens Cherchye, Bram Rock, Dieter Saelens and Marijn Verschelde
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Bram Rock: University of Leuven
Dieter Saelens: University of Leuven
Marijn Verschelde: University of Leuven

Journal of Productivity Analysis, 2024, vol. 62, issue 3, No 3, 301 pages

Abstract: Abstract We present a novel Data Envelopment Analysis (DEA)-type method to evaluate the productive efficiency of Decision Making Units (DMUs) when the empirical analyst has incomplete output information. Our method builds on the Afriat Theorem that was originally proposed in the context of consumer analysis. We translate this result to a production setting and show that it provides a productive basis for cost efficiency analysis in the absence of output information. Our method is versatile in that it can accommodate a continuum of instances characterized by incomplete information on output quantities. We illustrate its practical usefulness through an empirical application that evaluates the productive efficiency performance of countries in producing national welfare.

Keywords: efficiency measurement; nonparametric production analysis; incomplete output information; Afriat Theorem (search for similar items in EconPapers)
Date: 2024
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Working Paper: Productive Efficiency Analysis with Incomplete Output Information (2022)
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DOI: 10.1007/s11123-023-00697-w

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