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Measurement of Dynamic Efficiency: A Directional Distance Function Parametric Approach

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  • Teresa Serra
  • Alfons Oude Lansink
  • Spiro E. Stefanou

Abstract

This research proposes a parametric estimation of the structural dynamic efficiency measures proposed in 2009 by Silva and Oude Lansink. Overall, technical and allocative efficiency measurements are derived based on a directional distance function and the duality between this function and the optimal value function. The applicability of the parametric proposal is illustrated by assessing dynamic efficiency ratings for a sample of Dutch dairy farms observed from 1995 to 2005. Dynamic efficiency ratings indicate the possibility to achieve long-run cost savings on the order of 12% that are mainly to be accomplished through a reduction in input use. Copyright 2010, Oxford University Press.

Suggested Citation

  • Teresa Serra & Alfons Oude Lansink & Spiro E. Stefanou, 2010. "Measurement of Dynamic Efficiency: A Directional Distance Function Parametric Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 752-763.
  • Handle: RePEc:oup:ajagec:v:93:y:2010:i:3:p:752-763
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    File URL: http://hdl.handle.net/10.1093/ajae/aaq175
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    References listed on IDEAS

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    1. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
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    Cited by:

    1. Rahmatallah Poudineh & Grigorios Emvalomatis & Tooraj Jamasb, 2014. "Dynamic Efficiency and Incentive Regulation: An Application to Electricity Distribution Networks," Cambridge Working Papers in Economics 1422, Faculty of Economics, University of Cambridge.
    2. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro, 2014. "The Impact of the 2008 Economic Crisis on Dynamic Productivity Growth of the Spanish Food Manufacturing Industry. An Impulse Response Analysis," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182769, European Association of Agricultural Economists.
    3. Ang, Frederic & Oude Lansink, Alfons, 2014. "Dynamic Profit Inefficiency: A DEA Application to Belgian Dairy Farms," Working Papers 165693, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    4. Mercedes Beltrán & Ernest Reig, 2014. "Comparing conventional and organic citrus grower efficiency in Spain," Working Papers 1406, Department of Applied Economics II, Universidad de Valencia.
    5. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro E., 2014. "Assessing dynamic inefficiency of the Spanish construction sector pre- and post-financial crisis," European Journal of Operational Research, Elsevier, vol. 237(1), pages 349-357.
    6. Bouali Guesmi & Teresa Serra & Allen Featherstone, 2015. "Technical efficiency of Kansas arable crop farms: a local maximum likelihood approach," Agricultural Economics, International Association of Agricultural Economists, vol. 46(6), pages 703-713, November.
    7. Yu-Ying Lin, Eugene & Chen, Ping-Yu & Chen, Chi-Chung, 2013. "Measuring green productivity of country: A generlized metafrontier Malmquist productivity index approach," Energy, Elsevier, vol. 55(C), pages 340-353.
    8. Lansink, Alfons Oude & Stefanou, Spiro & Serra, Teresa, 2015. "Primal and dual dynamic Luenberger productivity indicators," European Journal of Operational Research, Elsevier, vol. 241(2), pages 555-563.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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