Skip to main content

Efficiency Measures and Input Aggregation

  • Chapter

Abstract

Activity analysis models of production that are used to calculate measures of technical, allocative, and overall efficiency typically assume that the production data are measured in physical units. However, it is often the case that data are expressed in money units. Moreover, the inputs are often aggregated into what we call here input-cost aggregates. It is shown that when input-cost aggregates are used the measure of overall efficiency is unbiased (the same as the value obtained with disaggregated data) when all inputs are variable but is biased when some inputs are fixed. Both the technical and allocative measures are shown to be biased whether or not all inputs are variable. In most cases, the direction of the bias is also established.

Keywords

  • Technical Efficiency
  • Efficiency Measure
  • Input Price
  • Physical Unit
  • Allocative Efficiency

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

This is a preview of subscription content, access via your institution.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Färe, R., Grosskopf, S. and Lovell, C.A.K. (1985), The Measurement of Efficiency of Production, Kluwer-Nijhoff Publishing, Hingham, MA.

    Google Scholar 

  • Färe, R., and Primont, D. (1988), “Efficiency Measures for Multiplant Firms with Limited Data”, in: Eichhorn, W. (ed.): Measurement in Economics: Theory and Applications of Economic Indices, Physica-Verlag, Heidelberg.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Editor information

Editors and Affiliations

Rights and permissions

Reprints and Permissions

Copyright information

© 1993 Springer-Verlag Berlin · Heidelberg

About this chapter

Cite this chapter

Primont, D. (1993). Efficiency Measures and Input Aggregation. In: Diewert, W.E., Spremann, K., Stehling, F. (eds) Mathematical Modelling in Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78508-5_28

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-78508-5_28

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-78510-8

  • Online ISBN: 978-3-642-78508-5

  • eBook Packages: Springer Book Archive