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Technical efficiency based on cost gradient measure

Author

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  • Miki Tsutsui

    (Central Research Institute of Electric Power Industry)

  • Kaoru Tone

    (National Graduate Institute for Policy Studies)

  • Yuichiro Yoshida

    (National Graduate Institute for Policy Studies)

Abstract

This study introduces a new scheme of data envelopment analysis (DEA) named cost gradient measure (CGM) to evaluate technical efficiency. In this model, we can obtain more cost conscious technical efficiency than those by other traditional DEA models such as CCR[7] and slacks-based measure (SBM) [19]. In addition, the CGM can avoid shortcomings of these traditional models, i.e. factor inefficiency scores can be measured for each input as opposed to CCR and SBM models. In this study, we show the generality of CGM that it includes CCR as a special case; and compare the CGM result with those of the other DEA models using illustrative data, and clarify favorite features of this model. In addition, we also apply these models to Japanese electric utilities and explain the characteristics of their results.

Suggested Citation

  • Miki Tsutsui & Kaoru Tone & Yuichiro Yoshida, 2009. "Technical efficiency based on cost gradient measure," GRIPS Discussion Papers 09-14, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:09-14
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    Cited by:

    1. Fusco, Elisa, 2015. "Enhancing non-compensatory composite indicators: A directional proposal," European Journal of Operational Research, Elsevier, vol. 242(2), pages 620-630.

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    Keywords

    cost gradient measure; DEA; technical efficiency; input price;

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