Underrestimation of Inefficiency in Social Efficiency Benchmarking with Non-Parametric Methodsof Production Technology Identification: A Note

Hun Koo Ha, Masashi Yamamoto, Yuichiro Yoshida and Anming Zhang
Additional contact information
Hun Koo Ha: Asia Pacific School of Logistics, Inha University
Masashi Yamamoto: Center for Eastern Studies, University of Toyama
Anming Zhang: Sauder School of Business, University of British Columbia

No 11-15, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: In the conventional social productive efficiency measurement, a DEA-based non-parametric method is typically employed to identify the piece-wise-linear production possibility frontier. Applying the directional distance-function approach a-la Luenberger (1992) to the production possibility frontier obtained in this fashion can, however, lead to an underestimation of inefficiency for a DMU with relatively large undesirable outputs. This underestimation becomes more acute if the sample size is small or data are clustered. This paper reveals the mechanism behind this underestimation bias, and then quantifies the degree of underestimation using nine-year panel data of rail and aviation sectors in Japan. Through a comparative analysis between parametric and non-parametric methods, we find, among others, that the underestimation of the aviation sector's productive inefficiency is as large as 80%, which the non-parametric method failed to detect.

Pages: 14 pages
Date: 2011-11
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://grips.repo.nii.ac.jp/?action=repository_ac ... bute_id=20&file_no=1 (application/pdf)

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:ngi:dpaper:11-15

Access Statistics for this paper

More papers in GRIPS Discussion Papers from National Graduate Institute for Policy Studies Contact information at EDIRC.
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).