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Static efficiency decompositions and capacity utilization: integrating economic and technical capacity notions

Author

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  • B. De Borger
  • K. Kerstens

    (UMR CNRS 8179 - Université de Lille, Sciences et Technologies - CNRS - Centre National de la Recherche Scientifique)

  • D. Prior
  • I. Van de Woestyne

Abstract

Starting from existing static decompositions of overall economic efficiency on non parametric production and cost frontiers, this paper proposes more comprehensive decompositions including several cost based notions of capacity utilisation. Furthermore, in case prices are lacking, we develop additional decompositions of overall technical efficiency integrating a technical concept of capacity utilisation. These new efficiency decompositions provide a link between short and long run economic analysis and, in empirical work, avoid conflating inefficiency and differences in capacity utilisation. An empirical analysis using a monthly panel of Chilean hydro-electric power plants illustrates the potential of these decomposition proposals.
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Suggested Citation

  • B. De Borger & K. Kerstens & D. Prior & I. Van de Woestyne, 2012. "Static efficiency decompositions and capacity utilization: integrating economic and technical capacity notions," Post-Print hal-00677646, HAL.
  • Handle: RePEc:hal:journl:hal-00677646
    DOI: 10.1080/00036846.2011.587783
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00677646
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    Cited by:

    1. Kerstens, Kristiaan & Sadeghi, Jafar & Van de Woestyne, Ignace, 2019. "Convex and nonconvex input-oriented technical and economic capacity measures: An empirical comparison," European Journal of Operational Research, Elsevier, vol. 276(2), pages 699-709.
    2. repec:eee:ejores:v:275:y:2019:i:1:p:387-397 is not listed on IDEAS
    3. Cesaroni, Giovanni & Kerstens, Kristiaan & Van de Woestyne, Ignace, 2019. "Short- and long-run plant capacity notions: Definitions and comparison," European Journal of Operational Research, Elsevier, vol. 275(1), pages 387-397.
    4. W. Erwin Diewert & Kevin J. Fox, 2018. "A decomposition of US business sector TFP growth into technical progress and cost efficiency components," Journal of Productivity Analysis, Springer, vol. 50(1), pages 71-84, October.

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    efficiency; capacity utilization;

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