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- Title
Axiomatic foundations of efficiency measurement on data-generated technologies.
- Authors
Russell, R. Robert; Schworm, William
- Abstract
We assess the ability of three well-known technical efficiency indexes, the Debreu-Farrell index, the Färe–Lovell index, and the Zieschang index, to satisfy the Färe–Lovell axioms and continuity axioms (for technologies as well as input quantities) on the class of technologies generated by standard mathematical-programming methods of measuring efficiency: data envelopment analysis (DEA) and free-disposal-hull (FDH) analysis. Our principal conclusions are that (a) restriction to these data-based technologies adds continuity in input quantities to the properties satisfied by the Färe–Lovell and the Zieschang indexes (thus eliminating a salient advantage of the Debreu–Farrell index), but (b) none of the indexes satisfies all Färe–Lovell axioms (nor all continuity axioms) on either DEA or FDH technologies, and hence (c) trade-offs among the indexes remain. These findings provide motivation for the search for an index that does satisfy these axioms on DEA and FDH technologies.
- Subjects
INDUSTRIAL efficiency; PRODUCTION (Economic theory); ECONOMIC efficiency; FOUNDATIONS of mathematical analysis; FOUNDATIONS of geometry; MATHEMATICAL proofs; AXIOMATIC set theory; DATA envelopment analysis; MULTIVARIATE analysis
- Publication
Journal of Productivity Analysis, 2009, Vol 31, Issue 2, p77
- ISSN
0895-562X
- Publication type
Article
- DOI
10.1007/s11123-008-0119-1