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Alternative efficiency measures for multiple-output production

Fernandez, C. and Koop, G.M. and Steel, M. (2005) Alternative efficiency measures for multiple-output production. Journal of Econometrics, 126 (2). pp. 411-444. ISSN 0304-4076

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Abstract

This paper has two main purposes. Firstly, we develop various ways of defining efficiency in the case of multiple-output production. Our framework extends a previous model by allowing for nonseparability of inputs and outputs. We also 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 main findings can be summarized as follows. 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.

Item type: Article
ID code: 6914
Keywords: banking, bayesian inference, dairy farms, pollution, productivity, separability, Finance, Economic Theory, Statistics, History and Philosophy of Science, Economics and Econometrics, Applied Mathematics
Subjects: Social Sciences > Finance
Social Sciences > Economic Theory
Social Sciences > Statistics
Department: Strathclyde Business School > Economics
Depositing user: Strathprints Administrator
Date Deposited: 25 Sep 2008
Last modified: 15 Apr 2015 11:43
Related URLs:
URI: http://strathprints.strath.ac.uk/id/eprint/6914

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