Cost Constrained Industry Inefficiency

Peyrache, Antonio (2015) Cost Constrained Industry Inefficiency. European Journal of Operational Research, 247 3: 996-1002. doi:10.1016/j.ejor.2015.06.067

Attached Files (Some files may be inaccessible until you login with your UQ eSpace credentials)
Name Description MIMEType Size Downloads
UQ415419_OA.pdf Full text (open access) application/pdf 1.00MB 0

Author Peyrache, Antonio
Title Cost Constrained Industry Inefficiency
Journal name European Journal of Operational Research   Check publisher's open access policy
ISSN 0377-2217
1872-6860
Publication date 2015-01-01
Sub-type Article (original research)
DOI 10.1016/j.ejor.2015.06.067
Open Access Status File (Author Post-print)
Volume 247
Issue 3
Start page 996
End page 1002
Total pages 7
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Abstract In this paper a definition of industry inefficiency in cost constrained production environments is introduced. This definition uses the indirect directional distance function and quantifies the inefficiency of the industry in terms of the overall output loss, given the industry cost budget. The industry inefficiency indicator is then decomposed into sources components: reallocation inefficiency arising from sub-optimal configuration of the industry; firm inefficiency arising from a failure to select optimal input quantities (given the prevalent inputs prices); firm inefficiency due to lack of best practices. The method is illustrated using data on Ontario electricity distributors. These data show that lack of best practices is only a minor component of the overall inefficiency of the industry (less than 10 percent), with reallocation inefficiency accounting for more than 75 percent of the overall inefficiency of the system. An analysis based on counter-factual input prices is conducted in order to illustrate how the model can be used to estimate the effects of a change in the regulation regime.
Keyword Data envelopment analysis (DEA)
Industry inefficiency
Indirect directional distance function
Productivity
Optimal configuration
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
 
Versions
Version Filter Type
Citation counts: TR Web of Science Citation Count  Cited 0 times in Thomson Reuters Web of Science Article
Scopus Citation Count Cited 0 times in Scopus Article
Google Scholar Search Google Scholar
Created: Fri, 16 Dec 2016, 22:02:51 EST by Anthony Yeates on behalf of Learning and Research Services (UQ Library)