Scale Efficiency and Productivity Change

The first objective of this paper is to develop a generic measure of scale efficiency for a multiple-input multiple-output firm, using basic principles of modern production theory. The second objective is to combine measures of technological change, technical efficiency change, and scale efficiency...

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Bibliographic Details
Published in:Journal of productivity analysis 2001-05, Vol.15 (3), p.159-183
Main Author: BALK, BERT M.
Format: Article
Language:English
Subjects:
Cost functions
Distance functions
Efficiency
Efficiency metrics
Index numbers
Input prices
Operations research
Productive efficiency
Productivity
Quantum efficiency
Shadow prices
Studies
Technological change
Technology
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Summary:The first objective of this paper is to develop a generic measure of scale efficiency for a multiple-input multiple-output firm, using basic principles of modern production theory. The second objective is to combine measures of technological change, technical efficiency change, and scale efficiency change into an encompassing (primal) measure of productivity change. This measure and its decomposition is compared to a number of recent proposals in order to shed light on what seems to have become a controversial issue. The paper proceeds by developing an encompassing dual measure of productivity change. This dual measure is then applied to panel data of a set of Dutch firms, continuing the empirical work of Balk (1998). It turns out that extending the Malmquist productivity index with factors measuring scale efficiency change and input mix change leads to appreciably different outcomes.
ISSN:0895-562X
1573-0441
DOI:10.1023/A:1011117324278