Measuring potential gains from specialization under non-convex technologies

Hervé Leleu, Stéphane Blancard () and Jean-Philippe Boussemart

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Abstract: In this paper, the Free Coordination Hull (FCH) approach developed by Green and Cook (2004) is combined with the Free Disposal Hull (FDH) model to detect potential gains from specialization. As a non-convex approach that allows both directly observed and summed Decision Making Units to define the production technology, FCH is the relevant model for analysing optimal reallocation of activity among smaller and more specialized units. Indeed in more traditional Data Envelopment Analysis models the convexity assumption precludes the possibility of detecting potential gains from specialization and can only reveal economies of scope. Therefore non-convex technologies are required to model diseconomies of scope. On the basis of FDH and FCH technologies, an overall efficiency measure is decomposed into three components, namely: technical, size and specialization efficiencies. A 2003 database of French farms is used as an illustration. Results indicate that input inefficiency in the agricultural sector is mainly driven by a lack of specialization, which represents approximately 50% of the overall inefficiency.

Keywords: specialization; free coordination hull; free disposal hull; agriculture (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (8)

Published in Journal of the Operational Research Society, 2011, 62 (10), pp.1871-1880. ⟨10.1057/jors.2010.148⟩

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Related works:
Journal Article: Measuring potential gains from specialization under non-convex technologies (2011)
Journal Article: Measuring potential gains from specialization under non-convex technologies (2011)
Working Paper: Measuring potential gains from specialization under non-convex technologies (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00585641

DOI: 10.1057/jors.2010.148

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