Input Aggregation and Firm Efficiency

Arthur C. Thomas and Loren W. Tauer

No 187073, Staff Papers from Cornell University, Department of Applied Economics and Management

Abstract: Technical efficiencies calculated using aggregated inputs are biased. It is shown empirically and analytically that input aggregation decreases calculated technical efficiencies and changes relative technical efficiencies among firms. Moreover, aggregation fails to separate technical efficiency effects from allocative efficiency effects. Thus, the calculated efficiencies are more properly economic efficiencies.

Keywords: Production Economics; Productivity Analysis (search for similar items in EconPapers)
Pages: 17
Date: 1989-06
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudasp:187073

DOI: 10.22004/ag.econ.187073

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