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Ranking Production Units According to Marginal Efficiency Contribution

Author

Listed:
  • Mojtaba Ghiyasi

    (Centre of Health Economics Research, University of Southern Denmark)

  • Jens Leth Hougaard

    (Department of Food and Resource Economics, University of Copenhagen)

Abstract

League tables associated with various forms of service activities from schools to hospitals illustrate the public need for ranking institutions by their productive performance. We present a new method for ranking production units which is based on each units marginal contribution to the technical efficiency of various “mergers” relative to a common reference technology. The approach is radically different from the usual one based on super-efficiency indexes in DEA. We illustrate the mechanics of our method by a series of numerical examples and further demonstrate that our new index inherits all relevant and desirable properties of the Farrell efficiency index upon which it is constructed.

Suggested Citation

  • Mojtaba Ghiyasi & Jens Leth Hougaard, 2014. "Ranking Production Units According to Marginal Efficiency Contribution," MSAP Working Paper Series 04_2014, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:msapwp:04_2014
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    File URL: http://okonomi.foi.dk/workingpapers/MSAPpdf/MSAP2014/MSAP_WP04_2014.pdf
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    References listed on IDEAS

    as
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    Keywords

    Production units; Ranking; Marginal efficiency contribution; DEA; Super efficiency; Contribution index;
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