While the conventional Farrell-Färe approach to efficiency measurement can identify the most inefficient firms, it fails to consider the efficiency of a group of firms thoroughly. This paper introduces efficiency measures that can be used to find the efficiency of a group of firms and pinpoint whether the group inefficiency is due to inefficiency inside or outside individual firms. Furthermore, a new way of finding the revenue maximum shadow price vector is introduced to compute the allocative efficiency of individual firms when price data are not available.
Scopus Subject Areas
- Economics and Econometrics
- Economics, Econometrics and Finance(all)