Setting handicaps to industrial sectors in DEA illustrated by Ethiopian industry

Kidanemariam Hailu and Kaoru Tone ()
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Kaoru Tone: National Graduate Institute for Policy Studies (GRIPS)

Annals of Operations Research, 2017, vol. 248, issue 1, No 8, 189-207

Abstract: Abstract In the ordinary macro-economic input–output tables, the industrial sector consists of several dozen industries and each industry in a certain sector is an aggregate of many companies in the sector. The sectoral statistics are the sum of statistics of companies in the respective sector. Usually, all sectors have the same set of inputs for producing outputs. For example, they have labour, capital and intermediate input as input and amount of production as output. We can apply traditional DEA models for evaluation of efficiency regarding all sectors by means of these common input and output factors. However, there remain concerns about comparing all sectors as a scratch race. Some sectors are in fields with matured technologies, while others are in emerging fields. Some are labour intensive, while others are capital intensive. These situations lead us to compare sectors under a handicap race. In this paper, we propose a new DEA model based on the non-convex frontiers that all associated sectors may exhibit and from which handicaps are derived. We apply this model to Ethiopian industry.

Keywords: Data envelopment analysis; Non-convex frontier; Handicap (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Working Paper: Setting handicaps to industrial sectors in DEA illustrated by Ethiopian industry (2014)
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DOI: 10.1007/s10479-016-2225-1

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