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Process Aggregation and Efficiency

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Author Info
Bogetoft, Peter
Abstract

We analyse how the aggregation of production processes affects efficiency evaluations. A production unit can be inefficient even though all its production processes are efficient. We show how to test if observed "inefficiencies" may be caused by an aggregation and how to correct efficiency measures for such aggregation generated inefficiencies. The tests and the adjusted efficiency measurement programs involve hypothetical dis-aggregations designed to put the evaluated unit in its best possible light.

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File URL: http://purl.umn.edu/24190
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Publisher Info
Paper provided by Royal Veterinary and Agricultural University, Food and Resource Economic Institute in its series Unit of Economics Working papers with number 24190.

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Date of creation: 1999
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Handle: RePEc:ags:rvaewp:24190

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Web page: http://www.foi.life.ku.dk/
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Related research
Keywords: Production Precesses; Data Envelopment Analysis (DEA); Aggregation; Efficiency; Production Economics;

References listed on IDEAS
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  1. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481. [Downloadable!] (restricted)
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