Abstract
The methodology of free disposal hull (FDH) measure of productive efficiency is defined and put in perspectivevis-à-vis other nonparametric techniques, in terms of the postulates on which they respectively rest. Computational issues are also considered, in relation to the linear programming techniques used in DEA. The first application bears on a comparison between a private and a public bank, in terms of the relative efficiency of their branches. Important characteristics of the data are revealed by FDH that are not by DEA, due to a better data fit. Next, efficiency estimates of judicial activities are used to evaluate what part of the existing backlog could be reduced by efficiency increases. Finally, with monthly data of an urban transit firm over 12 years, the FDH methodology is extended to a sequential treatment of time series, that supplements efficiency estimation with a measure of technical progress.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aigner, D., C.K. Lovell, and P. Schmidt. (1977). “Formulation and Estimation of Stochastic Frontier Production Function Models.”Journal of Econometrics 6, 21–37.
Atkinson, A.B. and J.E. Stiglitz. (1969). “A New View of Technical Change.”Economic Journal 79, 573–578.
Banker, R., A. Charnes, and W. Cooper. (1984). “Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis.”Management Science 30, 1078–1092.
Charnes, A., W. Cooper, B. Golany, L. Seiford, and J. Stutz. (1985). “Foundations of Data Envelopment Analysis for Pareto-Koopmans Efficient Empirical Production Functions.”Journal of Econometrics 30, 91–107.
Charnes, A., W.W. Cooper, and E. Rhodes. (1978). “Measuring the Efficiency of Decision Making Units.”European Journal of Operations Research 2(6), 429–444.
d'Aspremont, A. (1984).Une mesure générale de l'efficacité au sens de Farrell: application au cas de la STIB, Thèse de doctorat, Intitut d'Administration et de Gestion, Université Catholique de Louvain, Louvain-la-Neuve.
Deprins, D., L. Simar, and H. Tulkens. (1984). “Measuring Labor Efficiency in Post Offices,” In M. Marchand, P. Pestieau, and H. Tulkens (eds.),The Performance of Public Enterprises: Concepts and Measurement. Amsterdam: North-Holland, pp. 243–267.
Farrell, M.J. (1957). “The Measurement of Productive Efficiency.”Journal of the Royal Statistical Society, Series A, 120, part 3, 253–281.
Färe, R. and S. Grosskopf. (1991). “Non-parametric Tests of Regularity, Farrell Efficiency and Goodness of Fit.” mimeo.
Färe, R., S. Grosskopf, and C.A.K. Lovell. (1985).The Measurement of Efficiency of Production. Boston-Dordrecht: Kluwer-Nijhoff.
Førsund, F. and S. Kittelsen. (1990). “Efficiency Analysis of Norwegian District Courts,”Journal of Productivity Analysis 3 (3), 277–306.
Centre for Applied Research, Institute of Economics, University of Oslo.
Grosskopf, S. (1986). “The Role of the Reference Technology in Measuring Productive Efficiency.”Economic Journal 96, 499–513.
Jamar, M.A., and H. Tulkens. (1990). “Mesure de l'Efficacité de l'Activité des Tribunaux et Évaluation de l'Arriéré Judiciaire.” Paper presented at theEuropean Workshop on Productivity and Efficiency Measurement in the Service Industries held at CORE, October 19–20, 1989. Available asDocument de travail No. 90/1, Fonds de documentation statistique et économique sur les services publics belges, CORE, Université Catholique de Louvain, Louvain-la-Neuve.
Land, K.C., C.A.K. Lovell, and S. Thore. (1988). “Chance-Constrained Efficiency Analysis.” Paper presented at the National Science Foundation conference onParametric and Non-Parametric Approaches to Frontier Analysis held at the University of Carolina at Chapel Hill, September 30–October 1, 1988; revised April 1990.
Lewin, A., R. Morey, and T.J. Cook. (1982). “Evaluating the Administrative Efficiency of Courts.”OMEGA 10 (4), 401–411.
MacFadden, D. (1978). “Cost, Revenue and Profit Functions.” In M. Fuss and D. MacFadden (eds.),Production Economics: A Dual Approach to Theory and Applications. Amsterdam: North-Holland, pp. 3–110.
Marchand, M., P. Pestieau, and H. Tulkens. (1984). “The Performance of Public Enterprises: Normative, Positive and Empirical issues.” In M. Marchand, P. Pestieau, and H. Tulkens (eds.),The Performance of Public Enterprises: Concepts and Measurement. Amsterdam: North-Holland, pp. 3–42.
Meeusen, W., and J. Van Den Broeck. (1977). “Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error.”International Economic Review 18(2), 435–444.
Olesen, O., and N.C. Petersen. (1989). “Chance Constrained Efficiency Evaluation.” Publication No. 9/1989, Department of Management, Odense University, Odense.
Petersen, N.C. (1990). “Data Envelopment Analysis on a Relaxed Set of Assumptions.”Management Science 36, 305–314.
Respaut, B. (1989). “Mesures de l'Efficacité Productive des 911 Agences d'une Banque Privée Belge.” In H. Tulkens (ed.),Efficacité et Management. Travaux et Actes de la Cinquième Commission du Huitième Congrès des Economists Belges de Langue Française, Centre Interuniversitaire de Formation Permanente (CIFOP), Charleroi, Belgium, pp. 53–71.
Thiry, B. and H. Tulkens (eds.) (1988).La Performance Économique des Sociétés Belges de Transports Urbains. Centre International de Recherche et d'Information sur l'Economie Collective (CIRIEC), Liège, Belgium.
Thiry, B., and H. Tulkens. (1989). “Productivity, Efficiency and Technical Progress: Concepts and Measurement.”Annals of Public and Cooperative Economics/Annales de l'Economie Publique Sociale et Coopérative 60(1), 9–42.
Thiry, B., and H. Tulkens. (1992). “Allowing for Inefficiency in Parametric Estimates of Production Functions for Urban Transit Firms.”Journal of Productivity Analysis 3(1/2), 45–66.
Tulkens, H. (1986). “La Performance Productive d'un Service Public. Définitions, Méthodes de Mesure et Application à la Régie des Postes en Belgique.”L'Actualité Economique, Revue d'Analyse Economique (Montréal), 62(2), 306–335.
Tulkens, H. (ed.). (1989)Efficacité et Management. Travaux et Actes de la Cinquième Commission du Huitième Congrès des Economistes Belges de Langue Française, Centre Interuniversitaire de Formation Permanente (CIFOP), Charleroi, Belgium.
Tulkens, H., and P. Vanden Eeckaut. (1989). “Productive Efficiency Measurement in Retail Banking in Belgium.” Paper presented at theEuropean Workshop on Productivity and Efficiency Measurement in the Service Industries held at CORE, October 19–20.
Tulkens, H., and P. Vanden Eeckaut. (1991). “Non-Frontier Measures of Efficiency, Progress and Regress.” Paper presented at theSecond European Workshop on Efficiency and Productivity Measurement held at CORE, October 25–26, 1991;CORE Discussion Paper No. 9155, Center for Operations Research and Econometrics, Université Catholique de Louvain, Louvain-la-Neuve.
Vanden Eeckaut, P., H. Tulkens, and M.A. Jamar. (1993). “Cost-Efficiency in Belgian Municipalities.” In H. Fried, C.A.K. Lovell, and S. Schmidt. (eds.),The Measurement of Productive Efficiency: Techniques and Applications, New York: Oxford University Press, pp. 300–334.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Tulkens, H. On FDH efficiency analysis: Some methodological issues and applications to retail banking, courts, and urban transit. J Prod Anal 4, 183–210 (1993). https://doi.org/10.1007/BF01073473
Published:
Issue Date:
DOI: https://doi.org/10.1007/BF01073473