New Tools for Dealing with Errors-in-Variables in DEA

Laurens Cherchye, Timo Kuosmanen and Thierry Post ()

Public Economics Working Paper Series from Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics

Abstract: The axiomatic literature on technical efficiency measurement has drawn attention to the indication problem of the Debreu-Farrell (DF) measure. We follow a shadow price approach to preserve the DF benchmark while reconciling it with the Koopmans efficiency characterization. First, we define a set of Koopmans efficient references that can be rationalized in a similar way as the DF projection. The indication problem is then captured using a measure of implicit allocative or mix efficiency, also interpretable as a dominance measure in price space. We consequently present a mix-adjusted DF framework for efficiency measurement in which e.g. the Zieschang (1984) procedure can be

Keywords: Data Envelopment Analysis (DEA); errors-in-variables; efficiency depth; robust reference sets; financial institutions (search for similar items in EconPapers)
Pages: 18 pp.
Date: 2000
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Citations: View citations in EconPapers (6)

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Working Paper: New Tools for Dealing with Errors-in-Variables in DEA (2000)
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