An Introduction to Efficiency and Productivity Analysis
An Introduction to Efficiency and Productivity Analysis is designed as a primer for anyone seeking an authoritative introduction to efficiency and productivity analysis. It is a systematic treatment of four relatively new methodologies in Efficiency/Produ
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AN INTRODUCTION TO EFFICIENCY AND PRODUCTIVITY ANALYSIS
by Tim Coelli D. S. Prasada Rao George E. Batlese
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Springer Science+Business Media, LLC
ISBN 978-0-7923-8062-7
ISBN 978-1-4615-5493-6 (eBook)
DOI 10.1007/978-1-4615-5493-6
Library of Congress Cataloging-in-Publication Data A C.I.P. Catalogue record for this book is available from the Library of Congress.
Copyright © 1998 by Springer Science+Business Media New York Origina1ly published by Kluwer Academic Publishers in 1998 AII rights reserved. N o part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photocopying, record ing, or otherwise, without the prior written permission of the publisher, Springer Science+Business Media, LLC.
Printed on acid-free paper.
To Michelle, Visala and Marilyn
TABLE OF CONTENTS
List ofFigures List of Tables Preface 1. INTRODUCTION 1.1 Introduction 1.2 Some Informal Definitions 1.3 Overview of Methods 1.4 Outline of Chapters 1.5 What is Your Economics Background?
page xi xiii xv 1 1 2 6 7 9
2. REVIEW OF PRODUCTION ECONOMICS 2.1 Introduction 2.2 Production Functions 2.3 Price Information and Cost Minimisation and Profit Maximisation 2.4 Econometric Estimation of Production Functions 2.5 Conclusions
11 11 12 22 34 37
3. ADDITIONAL TOPICS IN PRODUCTION ECONOMICS 3.1 Introduction 3.2 Duality in Production 3.3 Econometric Estimation of Cost and Profit Functions 3.4 Multi-output Production and Distance Functions 3.5 Conclusions
39 39 39 53 59 66
4. INDEX NUMBERS AND PRODUCTIVITY MEASUREMENT 4.1 Introduction 4.2 Conceptual Framework and Notation 4.3 Formulae for Price Index Numbers 4.4 Quantity Index Numbers 4.5 Properties ofindex Numbers: The Test Approach 4.6 A Simple Numerical Example 4.7 Transitivity in Multilateral Comparisons 4.8 TFP Measurement Using Index Numbers 4.9 Empirical Application: Australian National Railways 4.10 Conclusions
69 69 70 72 74 79 81 84 87 93 97
5. ECONOMIC THEORY AND INDEX NUMBERS 5.1 Introduction
99 99
viii
CONTENTS
5.2 Decomposition ofa Simple TFP Index 5.3 The Economic-Theoretic Approach: Some Preliminaries 5.4 Output Price Indices 5.5 Input Price Indices 5.6 Output Quantity Indices 5.7 Input Quantity Indices 5.8 Productivity Indices 5.9 Malmquist Productivity Index: Some Additional Issues 5.10 Conclusions
100 103 105 110 113 117 120 126 130
6. EFFICIENCY MEASUREMENT USING DATA ENVELOPMENT ANALYSIS (DEA) 6.1 Introduction 6.2 Efficiency Measurement Concepts 6.3 The Constant Returns to Scale (CRS) DEA Model 6.4 The Variable Returns to Scale (VRS) Model and Scale Efficiencies 6.5 Input and Output Orientations 6.6 Conclusions
133 133 134 140 150 158 160
7. ADDITIONAL TOPICS ON DATA ENVELOPMENT ANALYSIS 7.1 Introduction 7.2 Price Information and Allocative Efficiency 7.3 Adjusting for Environment 7.4 Non-Discretionary Variables 7.5 Input Congestion 7.6 Treatment of Slacks 7.7 Empirical Application: Australian Universities 7.8 Conclusions
161 161 161 166 171 172 175 176 180
8. EFFICIENCY MEASUREMENT
