Technical and Allocative Efficiency in Spanish Port Cargo Handling Firms

Ana Rodriguez-Alvarez, Beatriz Tovar de la Fe and Lourdes Trujillo ()

No 2004/04, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: Atkinson and Cornwell (1994) present two methods that permit the calculation of allocative inefficiency: the parametric approach and the error component approach. Färe an Grosskopf (1990) and Atkinson and Primont (2002) demonstrate that replacing the usual cost frontier with an input distance function can overcome the main drawbacks of the first approach by obtaining firm and time indexes of allocative efficiency. With regard to the second approach, the advantages of the distance function are developed in Rodríguez-Álvarez et al. (2004) which have dealt with the hypothesis in which the allocative efficiency is time-invariant and only varies across firms. In this paper we extend the analysis in the case in which the efficiency is firm and time-varying in both approaches. Moreover, we can calculate firm and time-varying technical efficiency and, separately, a measure of technical change. To do this, we present a distance system that is comprised of an input distance function and the share cost equations associated. We apply our methodology to a panel data using a sample of cargo handling firms in Spanish ports.

Keywords: Efficiency production functions; homotheticity; holotheticity; returns to scale; technical efficiency (search for similar items in EconPapers)
Pages: 31
Date: 2004
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