Alternative efficiency measures for multiple-output production

Carmen Fernandez, Gary Koop and Mark Steel

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper has two main purposes. Firstly, we develop various ways of defining efficiency in the case of multiple output production. We specifically consider the case where some of the outputs are undesirable, such as pollutants. We investigate how these efficiency definitions relate to one another and to other approaches proposed in the literature. Secondly, we examine the behavior of these definitions in two examples of practically relevant size and complexity. One of these involves banking and the other agricultural data. Our findings are basically encouraging. For a given efficiency definition, efficiency rankings are found to be informative, despite the considerable uncertainty in the inference on efficiencies. It is, however, important for the researcher to select an efficiency concept appropriate to the particular issue under study, since different efficiency definitions can lead to quite different conclusions.

Keywords: banking; Bayesian inference; dairy farms; pollution; productivity; separability (search for similar items in EconPapers)
JEL-codes: C11 D24 (search for similar items in EconPapers)
Pages: 39
Date: 2003-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Alternative efficiency measures for multiple-output production (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:65

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