A translation invariant pure DEA model

YesThis communication complements the DEA model proposed by Lovell and Pastor (1999), by incorporating both positive and negative criteria in the model. As such, we propose a DEA model, known as pure DEA, using a directional distance function approach

The role of energy productivity in the U.S. agriculture

This paper investigates the role of energy on U.S. agricultural productivity using panel data at the state level for the period 1960-2004. We first provide a historical account of energy use in U.S. agriculture. To do this we rely on the Bennet cost indicator to study how the price and volume components of energy costs have developed over time. We then proceed to analyze the contribution of energy to productivity in U.S. agriculture employing the Bennet-Bowley productivity indicator. An important feature of the Bennet-Bowley indicator is its direct association with the change in (normalized) profits. Thus our study is also able to analyze the link between profitability and productivity in U.S. agriculture. Panel regression estimates indicate that energy prices have a negative effect on profitability in the U.S. agricultural sector. We also find that energy productivity has generally remained below total farm productivity following the 1973-1974 global energy crisis

A Directional Distance Function Approach to Void the Non-Archimedean in DEA

Over the past years, the data envelopment analysis (DEA) methodology has registered widespread use among researchers from many fields. Furthermore, it is important to note that the non-Archimedean infinitesimal, $\epsilon$, is a key concept in DEA models. Nevertheless, it is known that some computational difficulties arise when using $\epsilon$ in DEA. In this short communication, we show how the non-Archimedean may be voided using a directional distance function approach. Thus, our approach avoids choosing a real number ($10^{-5}$ or $10^{-6}$) as a value for $\epsilon$ or estimating the same

Developing a decomposable measure of profit efficiency using DEA

In for-profit organizations efficiency measurement with reference to the potential for profit augmentation is particularly important as is its decomposition into technical, and allocative components. Different profit efficiency approaches can be found in the literature to measure and decompose overall profit efficiency. In this paper, we highlight some problems within existing approaches and propose a new measure of profit efficiency based on a geometric mean of input/output adjustments needed for maximizing profits. Overall profit efficiency is calculated through this efficiency measure and is decomposed into its technical and allocative components. Technical efficiency is calculated based on a non-oriented geometric distance function (GDF) that is able to incorporate all the sources of inefficiency, while allocative efficiency is retrieved residually. We also define a measure of profitability efficiency which complements profit efficiency in that it makes it possible to retrieve the scale efficiency of a unit as a component of its profitability efficiency. In addition, the measure of profitability efficiency allows for a dual profitability interpretation of the GDF measure of technical efficiency. The concepts introduced in the paper are illustrated using a numerical example

Bank Efficiency, Productivity and Convergence in EU countries: A Weighted Russell Directional Distance Model

The objective of this study is three-fold. First we estimate and analyse bank efficiency and productivity changes in the EU28 countries with the application of a novel approach, a weighted Russell directional distance model. Second, we take a disaggregated approach and analyse the contribution of the individual bank inputs on bank efficiency and productivity growth. Third, we test for convergence in EU28 bank productivity as well as in the inefficiency of individual bank inputs. We find that bank efficiency has been undermined by the financial crisis in banks notably from the EU15 countries. We also argue that bank efficiency and productivity in EU countries vary across the banking sector with banks from the ‘old’ EU showing higher efficiency levels. Nonetheless, a noticeable catching up process is observed for banks from the ‘new’ EU countries. Consequently, we do not find evidence of group convergence for bank productivity but there is evidence of convergence in bank efficiency change and technical change among the EU28 countries throughout the period 2005-2014. The driving force seems to be convergent technical change from the old EU Member States’ banks. On the other hand, almost no convergence is detected for the banks’ individual inputs while the transition paths show heightened diversity during the crisis years

On modelling pollution-generating technologies

“NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Environmental Economics and Management . Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Environmental Economics and Management Volume 64, Issue 1, July 2012, Pages 117–135; available online at http://www.sciencedirect.com/We argue analytically that many commonly used models of pollution-generating technologies, which treat pollution as a freely disposable input or as a weakly disposable and null-joint output, may generate unacceptable implications for the trade-offs among inputs, outputs, and pollution. We show that the correct trade-offs in production are best captured if a pollution-generating technology is modeled as an intersection of an intended-production technology of the firm and nature's residual-generation set. The former satisfies standard disposability properties, while the latter violates free (strong) disposability of pollution and pollution-causing inputs. As a result, the intersection—which we call a by-production technology—violates standard free disposability of pollution and pollution-causing inputs. Employing data envelopment analysis on an electric-power-plant database, we illustrate shortcomings, under by-production, of two popular efficiency indexes: the hyperbolic and directional-distance-function indexes. We propose and implement an alternative index with superior properties. Under by-production, most efficiency indexes decompose very naturally into intended-production and environmental efficiency indexes. This decomposition is difficult to find under alternative specifications of pollution-generating technologies

Environmental performance assessment of european countries

The European Union(EU) has been promoting an integrated approach to climate protection and energy policy, through a set of key objectives for 2020, 2030 and 2050, linking Europe’s green agenda with its need for energy security and competitiveness.This paper aims to evaluate the environmental efficiency of European Countries from 2010 to 2015 towards the set targets, through a Data Envelopment Analysis (DEA) model.The DEA model assesses the ability of each country in minimizing current resources while maximizing the gross domestic product and minimizing undesirable outputs,such as GHG emissions.The DEA model is based on directional distance Function, imposing weak disposability for the undesirable output. Results obtained show that globally, in the period under analysis, the EU has increased its environmental efficiency which is consistent with the analysis of the indicators of the 2020 climate and energy package.info:eu-repo/semantics/publishedVersio

Do the home field, global advantage, and liability of unfamiliarness hypotheses hold? empirical evidence from Malaysia

The study explores the home field, global advantage, and liability of unfamiliarness hypotheses in the Malaysian banking sector. The results indicate that Malaysian banks have exhibited productivity progress mainly attributed to technological progress. The authors find negative relationship between foreign and government ownership and bank productivity. Likewise, the publicly listed banks have been relatively less productive compared to private banks, thus rejecting the market discipline hypothesis. The empirical findings suggest that foreign banks from the North American countries to be the least productive banking group lending support to the home field advantage and the limited form of the global advantage hypotheses

An economic approach to achievement and improvement indexes

This study proposes a useful alternative to the "aggregate deprivation index" which is used to measure the well-beings of individuals in different countries or geographic locations. Furthermore, we also propose an improvement index which alleviates well known difficulties associated with overtime comparisons of "aggregate deprivation index". While deriving our indexes, we pursued an economic approach to index numbers theory and relied on the assumptions of optimizing behavior. The proposed achievement index has its roots in the theory of quantity indexes whose axiomatic properties are well established. The roots of our improvement index on the other hand, is well grounded in the productivity growth literature. The study also provides a numerical example

An analysis of the relevance of off-balance sheet items in explaining productivity change in European banking

The 1990s have witnessed a significant growth in bank income generated through non-traditional activities, especially for large EU universal banking institutions. Using the non-parametric Malmquist methodology this study analyses the impact of the inclusion of off-balance sheet (OBS) business in the definition of banks' output when estimating total factor productivity change indexes. Whereas the results reinforce the prevalent view in the recent literature, indicating that the exclusion of non-traditional activities leads to a misspecification of banks' output, the impact of the inclusion of these activities varies. Overall, the inclusion of OBS items results in an increase in estimated productivity levels for all countries under study. However, the impact seems to be the biggest on technological change rather than efficiency change. © 2005 Taylor & Francis