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The Measurement of Efficiency Relative to a Frontier Production Function

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  • Wesley D. Seitz

Abstract

A method is presented for estimating a frontier production function allowing economies and diseconomies of scale using linear programming techniques. The general applicability of this function is illustrated by considering the neutral and nonneutral cases. Indexes of technical, price, and economic efficiency of production of observations of equal scale are introduced. Three equivalent efficiency indexes are offered which measure the efficiency of alternative scale activities. Utilization of the efficiency indexes in determining the nature of the production function, causes of observed inefficiency, and the degree and nature of technological advance are discussed.

Suggested Citation

  • Wesley D. Seitz, 1970. "The Measurement of Efficiency Relative to a Frontier Production Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 52(4), pages 505-511.
  • Handle: RePEc:oup:ajagec:v:52:y:1970:i:4:p:505-511.
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    File URL: http://hdl.handle.net/10.2307/1237257
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    Cited by:

    1. Toshiyuki Sueyoshi, 1999. "DEA Duality on Returns to Scale (RTS) in Production and Cost Analyses: An Occurrence of Multiple Solutions and Differences Between Production-Based and Cost-Based RTS Estimates," Management Science, INFORMS, vol. 45(11), pages 1593-1608, November.
    2. repec:rss:jnljms:v4i9p2 is not listed on IDEAS
    3. 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.
    4. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2007. "The measurement of returns to scale under a simultaneous occurrence of multiple solutions in a reference set and a supporting hyperplane," European Journal of Operational Research, Elsevier, vol. 181(2), pages 549-570, September.
    5. Valentin Zelenyuk, 2019. "Data Envelopment Analysis and Business Analytics: The Big Data Challenges and Some Solutions," CEPA Working Papers Series WP072019, School of Economics, University of Queensland, Australia.
    6. Spielman, Kimberly & Whipple, Glen & McLemore, Dan, 1982. "Estimation Of A Long Run Average Cost Curve Using A Frontier Function: An Application To The Tennessee Livestock Auction Market Industry," 1982 Annual Meeting, August 1-4, Logan, Utah 279185, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Lars Jonasson, 1997. "A Policy Oriented Multi‐Input And Multi‐Output Measure Of Overall Efficiency And Its Decomposition," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 52-64, January.
    8. Weaver, Robert D., 1979. "Survey of Promising Developments in Supply Response: Pre- and Post-Data Econometric Methods for Integration of Neo-Classical Theory with Sample Evidence," Staff Paper Series 256836, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    9. repec:pal:jorsoc:v:60:y:2009:i:11:d:10.1057_jors.2008.185 is not listed on IDEAS
    10. Kent Olson & Linh Vu, 2009. "Economic efficiency in farm households: trends, explanatory factors, and estimation methods," Agricultural Economics, International Association of Agricultural Economists, vol. 40(5), pages 587-599, September.

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