TY - JOUR
T1 - Solving the puzzles of structural efficiency
AU - Li, Sung ko
AU - Cheng, Yuk shing
N1 - Funding Information:
The work described in this paper is partially supported by a grant from the Research Grant Council of Hong Kong Special Administrative Region, China (Project No. HKBU2010/02H) and a grant from the Hong Kong Baptist University (Project No. FRG/05-06/I-17).
PY - 2007/7/16
Y1 - 2007/7/16
N2 - Since the concept of "structural efficiency" first appeared in Farrell [Farrell, M.J., 1957. The measurement of productive efficiency. Journal of the Royal Statistical Society, Series A, Part III 120, 253-281], attempts have been made to derive measures for the performance of a group of production units (often referred to an industry with many firms). Many empirical studies used the technical efficiency of an average unit to measure the structural efficiency of a group, but researchers have been puzzled by the discrepancies between the average of individual efficiency scores and the performance of the group as a whole. In this paper, we point out that the "shadow price model" provides a useful framework for understanding the economic meaning of the structural efficiency as well as its components. By recognizing these components, the puzzles related to the inconsistencies between the individual and group performance can be solved readily.
AB - Since the concept of "structural efficiency" first appeared in Farrell [Farrell, M.J., 1957. The measurement of productive efficiency. Journal of the Royal Statistical Society, Series A, Part III 120, 253-281], attempts have been made to derive measures for the performance of a group of production units (often referred to an industry with many firms). Many empirical studies used the technical efficiency of an average unit to measure the structural efficiency of a group, but researchers have been puzzled by the discrepancies between the average of individual efficiency scores and the performance of the group as a whole. In this paper, we point out that the "shadow price model" provides a useful framework for understanding the economic meaning of the structural efficiency as well as its components. By recognizing these components, the puzzles related to the inconsistencies between the individual and group performance can be solved readily.
KW - Aggregate allocative efficiency
KW - Aggregate technical efficiency
KW - Data envelopment analysis
KW - Economics
KW - Industry efficiency
KW - Structural efficiency
UR - http://www.scopus.com/inward/record.url?scp=33846679837&partnerID=8YFLogxK
U2 - 10.1016/j.ejor.2006.05.010
DO - 10.1016/j.ejor.2006.05.010
M3 - Journal article
AN - SCOPUS:33846679837
SN - 0377-2217
VL - 180
SP - 713
EP - 722
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 2
ER -