Static Efficiency Decompositions and Capacity Utilisation: Integrating Economic and Technical Capacity Notions
AbstractStarting from existing static decompositions of overall economic efficiency on non-parametric production and cost frontiers, this paper proposes more comprehensive decompositions including several cost-based notions of capacity utilisation. Furthermore, in case prices are lacking, we develop additional decompositions of overall technical efficiency integrating a technical concept of capacity utilisation. These new efficiency decompositions provide a link between short and long run economic analysis and, in empirical work, avoid conflating inefficiency and differences in capacity utilisation. An empirical analysis using a monthly panel of Chilean hydro-electric power plants illustrates the potential of these decomposition proposals.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Hogeschool-Universiteit Brussel, Faculteit Economie en Management in its series Working Papers with number 2009/30.
Length: 30 page
Date of creation: Mar 2009
Date of revision:
efficiency; capacity utilisation;
Other versions of this item:
- Bruno De Borger & Kristiaan Kerstens & Diego Prior & Ignace Van de Woestyne, 2013. "Static efficiency decompositions and capacity utilization: integrating economic and technical capacity notions," Applied Economics, Taylor & Francis Journals, vol. 45(24), pages 3529-3529, August.
- Bruno De Borger & Kristiaan Kerstens & Diego Prior & Ignace Van de Woestyne, 2012. "Static efficiency decompositions and capacity utilization: integrating economic and technical capacity notions," Applied Economics, Taylor & Francis Journals, vol. 44(31), pages 4125-4141, November.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pollitt, M.G., 2004.
"Electricity Reform in Chile: Lessons for Developing Countries,"
Cambridge Working Papers in Economics
0448, Faculty of Economics, University of Cambridge.
- M. Pollitt, 2004. "Electricity reform in Chile. Lessons for developing countries," Competition and Regulation in Network Industries, Intersentia, vol. 5(3), pages 221-263, September.
- Michael Pollitt, 2004. "Electricity Reform in Chile Lessons for Developing Countries," Working Papers 0416, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Kirkley, James E. & Morrison Paul, Catherine J. & Squires, Dale, 2004. "Deterministic and Stochastic Capacity Estimation for Fishery Capacity Reduction," Marine Resource Economics, Marine Resources Foundation, vol. 19(3).
- De Borger B. & Kerstens K., 2000.
"The Malmquist productivity index and plant capacity utilisation,"
2000020, University of Antwerp, Faculty of Applied Economics.
- De Borger, Bruno & Kerstens, Kristiaan, 2000. " The Malmquist Productivity Index and Plant Capacity Utilization," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 303-10, June.
- Rowland, William W. & Langemeier, Michael R. & Schurle, Bryan W. & Featherstone, Allen M., 1998. "A Nonparametric Efficiency Analysis For A Sample Of Kansas Swine Operations," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(01), July.
- Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
- John McDonald, 1996. "Note: A Problem with the Decomposition of Technical Inefficiency into Scale and Congestion Components," Management Science, INFORMS, vol. 42(3), pages 473-474, March.
- Pascoe, Sean & Tingley, Diana, 2006. "Economic capacity estimation in fisheries: A non-parametric ray approach," Resource and Energy Economics, Elsevier, vol. 28(2), pages 124-138, May.
- Fare, Rolf & Grosskopf, Shawna & Lovell, C A Knox, 1983. " The Structure of Technical Efficiency," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(2), pages 181-90.
- Fare, Rolf & Grosskopf, Shawna, 1985. " Nonparametric Cost Approach to Scale Efficiency," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(4), pages 594-604.
- Fuss, Melvyn & McFadden, Daniel & Mundlak, Yair, 1978. "A Survey of Functional Forms in the Economic Analysis of Production," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 4 McMaster University Archive for the History of Economic Thought.
- Coelli, Tim & Grifell-Tatje, Emili & Perelman, Sergio, 2002.
"Capacity utilisation and profitability: A decomposition of short-run profit efficiency,"
International Journal of Production Economics,
Elsevier, vol. 79(3), pages 261-278, October.
- COELLI, Tim & GRIFELL-TATJE, Emili & PERELMAN, Sergio, 2001. "Capacity utilisation and profitability: a decomposition of short run profit efficiency," CORE Discussion Papers 2001052, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Subhash C. Ray & Kankana Mukherjee & Yanna Wu, 2006.
"Direct And Indirect Measures Of Capacity Utilization: A Non-Parametric Analysis Of Us Manufacturing,"
University of Manchester, vol. 74(4), pages 526-548, 07.
- Subhash C. Ray & Kankana Mukherjee & Yanna Wu, 2005. "Direct and Indirect Measures of Capacity Utilization: A Nonparametric Analysis of U.S. Manufacturing," Working papers 2005-36, University of Connecticut, Department of Economics.
- Morrison, Catherine J, 1985. "Primal and Dual Capacity Utilization: An Application to Productivity Measurement in the U.S. Automobile Industry," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 312-24, October.
- Førsund, Finn R. & Hjalmarsson, Lennart, 1978.
"Generalized Farrell Measures of Efficiency: An Application to Milk Processing in Swedish Dairy Plants,"
Working Paper Series
17, Research Institute of Industrial Economics.
- Forsund, Finn R & Hjalmarsson, Lennart, 1979. "Generalised Farrell Measures of Efficiency: An Application to Milk Processing in Swedish Dairy Plants," Economic Journal, Royal Economic Society, vol. 89(354), pages 294-315, June.
- Bogetoft, Peter & Fare, Rolf, 1999.
"Allocative Efficiency of Technically Inefficient Production Units,"
Unit of Economics Working papers
24217, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
- Bogetoft, Peter & Fare, Rolf & Obel, Borge, 2006. "Allocative efficiency of technically inefficient production units," European Journal of Operational Research, Elsevier, vol. 168(2), pages 450-462, January.
- Briec, Walter & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2010.
"Tangency capacity notions based upon the profit and cost functions: A non-parametric approach and a general comparison,"
Elsevier, vol. 27(5), pages 1156-1166, September.
- Briec, Walter & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2010. "Tangency Capacity Notions Based upon the Profit and Cost Functions: A Non-Parametric Approach and a General Comparison," Working Papers 2010/04, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- Seitz, Wesley D, 1971. "Productive Efficiency in the Steam-Electric Generating Industry," Journal of Political Economy, University of Chicago Press, vol. 79(4), pages 878-86, July-Aug..
- Hulten, Charles R., 1986. "Productivity change, capacity utilization, and the sources of efficiency growth," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 31-50.
- Fare, Rolf & Grosskopf, Shawna & Kokkelenberg, Edward C, 1989. "Measuring Plant Capacity, Utilization and Technical Change: A Nonparametric Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(3), pages 655-66, August.
- Bonin, John P & Jones, Derek C & Putterman, Louis, 1993. "Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1290-320, September.
- Bye, Torstein & Bruvoll, Annegrete & Aune, Finn Roar, 2008. "Inflow shortages in deregulated power markets -- Reasons for concern?," Energy Economics, Elsevier, vol. 30(4), pages 1693-1711, July.
- Caves, Richard E., 2007. "In praise of the Old I.O," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 1-12, February.
- Grosskopf, S, 1986. "The Role of the Reference Technology in Measuring Productive Efficiency," Economic Journal, Royal Economic Society, vol. 96(382), pages 499-513, June.
- Segerson, Kathleen & Squires, Dale, 1990. "On the measurement of economic capacity utilization for multi-product industries," Journal of Econometrics, Elsevier, vol. 44(3), pages 347-361, June.
- Nelson, Randy A, 1989. "On the Measurement of Capacity Utilization," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 273-86, March.
- Berndt, Ernst R & Morrison, Catherine J, 1981. "Capacity Utilization Measures: Underlying Economic Theory and an Alternative Approach," American Economic Review, American Economic Association, vol. 71(2), pages 48-52, May.
- Scott E. Atkinson & Jeffrey H. Dorfman, 2009. "Feasible estimation of firm-specific allocative inefficiency through Bayesian numerical methods," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(4), pages 675-697.
- Segerson, Kathleen & Squires, Dale, 1993. "Capacity Utilization under Regulatory Constraints," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 76-85, February.
- Segerson, Kathleen & Squires, Dale, 1995. "Measurement of Capacity Utilization for Revenue-Maximizing Firms," Bulletin of Economic Research, Wiley Blackwell, vol. 47(1), pages 77-84, January.
- E. Grifell-Tatjé & C.A.K. Lovell, 2000. "Cost and productivity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 19-30.
- Lawrence R. Klein, 1958. "The Measurement of Capacity," Cowles Foundation Discussion Papers 49, Cowles Foundation for Research in Economics, Yale University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Janssens).
If references are entirely missing, you can add them using this form.