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Scale Efficiency and Productivity Change

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  • Bert Balk

Abstract

Thefirst objective of this paper is to develop a generic measureof scale efficiency for a multiple-input multiple-output firm,using basic principles of modern production theory. The secondobjective is to combine measures of technological change, technicalefficiency change, and scale efficiency change into an encompassing(primal) measure of productivity change. This measure and itsdecomposition is compared to a number of recent proposals inorder to shed light on what seems to have become a controversialissue. The paper proceeds by developing an encompassing dualmeasure of productivity change. This dual measure is then appliedto panel data of a set of Dutch firms, continuing the empiricalwork of Balk (1998). It turns out that extending the Malmquistproductivity index with factors measuring scale efficiency changeand input mix change leads to appreciably different outcomes. Copyright Kluwer Academic Publishers 2001

Suggested Citation

  • Bert Balk, 2001. "Scale Efficiency and Productivity Change," Journal of Productivity Analysis, Springer, vol. 15(3), pages 159-183, May.
    • Handle: RePEc:kap:jproda:v:15:y:2001:i:3:p:159-183
    DOI: 10.1023/A:1011117324278
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    1. Ray, Subhash C & Desli, Evangelia, 1997. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries: Comment," American Economic Review, American Economic Association, vol. 87(5), pages 1033-1039, December.
    2. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    3. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455.
    4. 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.
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