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Accounting for slacks to measure and decompose revenue efficiency in the Spanish Designation of Origin wines with DEA

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  • Aparicio, Juan
  • Borras, Fernando
  • Pastor, Jesus T.
  • Vidal, Fernando

Abstract

In this paper, we show how Data Envelopment Analysis (DEA) may be used to measure and decompose revenue inefficiency, taking into account all sources of technical waste in the context of an application to assess the Spanish quality wine sector, in particular Designation of Origin (DO) wines. We try to go beyond the standard approaches, which use Shephard distance functions or directional distance functions, to provide decomposition that incorporates slacks as a source of technical inefficiency. To accomplish this, we will base our analysis on a recent approach introduced in Cooper et al. (2011a). In particular, we show how an output-oriented version of the Weighted Additive model can be used to properly identify revenue, technical, and allocative inefficiencies in Spanish DOs. In the application, we conclude that the main source of revenue inefficiency in this sector is technical waste, and that Cava can be highlighted as the DO that performs as a benchmark for more numbers of units.

Suggested Citation

  • Aparicio, Juan & Borras, Fernando & Pastor, Jesus T. & Vidal, Fernando, 2013. "Accounting for slacks to measure and decompose revenue efficiency in the Spanish Designation of Origin wines with DEA," European Journal of Operational Research, Elsevier, vol. 231(2), pages 443-451.
    • Handle: RePEc:eee:ejores:v:231:y:2013:i:2:p:443-451
    DOI: 10.1016/j.ejor.2013.05.047
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    16. Tóth, József & Gál, Péter, 2014. "Is the New Wine World more efficient? Factors influencing technical efficiency of wine production," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 116(2), pages 1-5, August.
    17. Athanasia Mavrommati & Alexandra Pliakoura, 2025. "Performance dynamics in Greek wine sector: a study of technical efficiency and strategic implications," Operational Research, Springer, vol. 25(1), pages 1-22, March.
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    19. María Jesús Ruiz Fuensanta & Francesc Hernández Sancho & Vicent Soler i Marco, 2015. "In vino veritas: competitive factors in wine-producing industrial districts," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 32, pages 149-164.
    20. Hachmi Ben Ameur & Zied Ftiti & Eric Le Fur, 2024. "What can we learn from the analysis of the fine wines market efficiency?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 703-718, January.

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