A Unifying Framework for Decomposing Economic Inefficiency: The General Direct Approach and the Reverse Approaches

Jesús T. Pastor, Juan Aparicio and José Zofío
Additional contact information
Jesús T. Pastor: Universidad Miguel Hernandez de Elche

Chapter Chapter 13 in Benchmarking Economic Efficiency, 2022, pp 487-604 from Springer

Abstract: Abstract The usual and well-established methods, explained and used in most of the previous chapters, for deriving a specific overall economic inefficiency decomposition associated with a given technical efficiency measure (multiplicative or additive), which we refer to as the traditional approaches, rely on the same “modus operandi”; i.e., they are based on dual relationships where allocative efficiency plays a fundamental role. Allocative inefficiency is obtained as the residual from a Fenchel-Mahler inequality that shows that the normalized economic inefficiency for a specific firm is greater or equal to its technical inefficiency. Accounting for allocative efficiency allows the closure of the inequality and enables a decomposition of economic efficiency considering technical and price (allocative) criteria, with the value of allocative efficiency clearly depending upon the chosen technical efficiency measure. Researchers have been using these traditional methods for at least half a century, and we take stock of the existing contributions and current state of the art in the previous chapters.

Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-3-030-84397-7_13

Ordering information: This item can be ordered from
http://www.springer.com/9783030843977

DOI: 10.1007/978-3-030-84397-7_13

Access Statistics for this chapter

More chapters in International Series in Operations Research & Management Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().