Measuring productive efficiency using Nerlovian profit efficiency indicator and metafrontier analysis
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The aim of this paper is to illustrate the measurement of productive efficiency using Nerlovian indicator and metafrontier with data envelopment analysis techniques. Further, we illustrate how profit efficiency of firms operating in different regions can be aggregated into one overarching frontier. Sugarcane production in three regions in Kenya has been used to illustrate these concepts. Results show that the sources of inefficiency in all regions are both technical and allocative, but allocative efficiency contributes more to the overall Nerlovian (in)efficiency indicator.
KeywordsProductive efficiency Nerlovian profit efficiency indicator Metafrontier Data envelopment analysis Sugarcane farming
The authors thank the anonymous reviewers and Professor Constantin Zopounidis, the editor of Operational Research: An International Journal for their insightful comments and suggestions.
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