The Measurement of Efficiency Relative to a Frontier Production Function

Wesley D. Seitz

American Journal of Agricultural Economics, 1970, vol. 52, issue 4, 505-511

Abstract: A method is presented for estimating a frontier production function allowing economies and diseconomies of scale using linear programming techniques. The general applicability of this function is illustrated by considering the neutral and nonneutral cases. Indexes of technical, price, and economic efficiency of production of observations of equal scale are introduced. Three equivalent efficiency indexes are offered which measure the efficiency of alternative scale activities. Utilization of the efficiency indexes in determining the nature of the production function, causes of observed inefficiency, and the degree and nature of technological advance are discussed.

Date: 1970
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:52:y:1970:i:4:p:505-511.

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