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relative to an efficient technologywhich is generally represented by some form of frontier function.Frontiers have been3estimated using many different methods over the past 40 years.The two principamethods are:
1.data envelopment analysis(DEA)and
2.stochastic frontiers,
which involve mathematical programming and econometric methods,respectively
This paper and the DEAP computer program are concerned with the use of DEAmethods.The computer program FRONTIER can be used to estimate frontiers usingstochastic frontier methods.For more information on FRONTIER see Coelli(1992
1994).The discussion in this section provides a very brief introduction to modern efficiencymeasurement.A more detailed treatment is provided by Fare,Grosskopf and Lovel(1985,1994)and Lovell(1993).Modern efficiency measurement begins with Farrel
(1957)who drew upon the work of Debreu(1951)and Koopmans(1951)to define
simple measure of firm efficiency which could account for multiple inputs.Hproposed that the efficiency of a firm consists of two components:technical efficiencywhich reflects the ability of a firm to obtain maximal output from a given set of inputsand allocative efficiency,which reflects the ability of a firm to use the inputs in optimaproportions,given their respective prices.These two measures are then combined toprovide a measure of total economic efficiency.
The following discussion begins with Farrell’s original ideas which were illustrated ininput/input space and hence had an input-reducing focus.These are usually termedinput-orientated measures.
2.1 Input-Orientated Measures
Farrell illustrated his ideas using a simple example involving firms which use two input
(x1 and x2)to produce a single output(y),under the assumption of constant returns toscale.
代写留学生论文Knowledge of the unit isoquant of the fully efficient firm,
represented by SSprice
efficiency instead of allocative efficiency and the term overall efficiency instead of economicefficiency.The terminology used in the present document conforms with that which has been usedmost often in recent literature.The constant returns to scale assumption allows one to represent the technology using a unitisoquant.Furthermore,Farrell also discussed the extension of his method so as to accommodate morethan two inputs,multiple outputs,and non-constant returns to scale.

 

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