Measuring potential gains from specialization under non-convex technologies
AbstractIn this paper, the Free Coordination Hull (FCH) approach developed by Green and Cook (2004) is combined with the Free Disposal Hull (FDH) model to detect potential gains from specialization. As a non-convex approach that allows both directly observed and summed decision making units (DMUs) to define the production technology, FCH is the relevant model for analyzing optimal reapportionment of activity among smaller and more specialized units. Indeed the convexity assumption in more traditional Data Envelopment Analysis (DEA) models precludes the possibility of detecting potential gains from specialization and can only reveal economies of scope. Therefore non-convex technologies are required to model diseconomies of scope. Based on FDH and FCH technologies, an overall efficiency measure is decomposed into three components, namely technical, size and specialization efficiencies. A database of French farms for the year 2003 is used for illustration. Results indicate that input inefficiency in the agricultural sector is driven mainly by lack of specialization, which represents about 50% of overall inefficiency.
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 IESEG School of Management in its series Working Papers with number 2009-ECO-02.
Length: 16 pages
Date of creation: Mar 2009
Date of revision:
specialization; free coordination hull; free disposal hull; agriculture;
Other versions of this item:
- S Blancard & J-P Boussemart & H Leleu, 2011. "Measuring potential gains from specialization under non-convex technologies," Journal of the Operational Research Society, Palgrave Macmillan, vol. 62(10), pages 1871-1880, October.
- NEP-AGR-2009-10-31 (Agricultural Economics)
- NEP-ALL-2009-10-31 (All new papers)
- NEP-EFF-2009-10-31 (Efficiency & Productivity)
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.:
- Banker, Rajiv D., 1984. "Estimating most productive scale size using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 17(1), pages 35-44, July.
- M. J. Farrell, 1959. "The Convexity Assumption in the Theory of Competitive Markets," Journal of Political Economy, University of Chicago Press, vol. 67, pages 377.
- Peter Bogetoft & Dexiang Wang, 2005.
"Estimating the Potential Gains from Mergers,"
Journal of Productivity Analysis,
Springer, vol. 23(2), pages 145-171, 05.
- Panzar, John C & Willig, Robert D, 1981. "Economies of Scope," American Economic Review, American Economic Association, vol. 71(2), pages 268-72, May.
- Wu, Shunxiang & Prato, Anthony A., 2006. "Cost Efficiency and Scope Economies of Crop and Livestock Farms in Missouri," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(03), December.
- Maindiratta, Ajay, 1990. "Largest size-efficient scale and size efficiencies of decision-making units in data envelopment analysis," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 57-72.
- Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
- Chavas, Jean-Paul & Aliber, Michael, 1993. "An Analysis Of Economic Efficiency In Agriculture: A Nonparametric Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Monika Marin).
If references are entirely missing, you can add them using this form.