Benchmarking Economic Efficiency: Technical and Allocative Fundamentals

This book provides a comprehensive definition and measurement of economic efficiency,using the economic theory of duality as a guiding framework. It offers practical implementation through Data Envelopment Analysis and provides a software package in the open-source Julia language. The book discusses the decomposition of economic efficiency into technical and allocative criteria and presents models for different measures of economic efficiency,including Russell and enhanced graph Russell measures. It emphasizes the importance of benchmarking economic efficiency for all business stakeholders and highlights the main conclusions from years of research on the topic.

Format: Hardback
Length: 640 pages
Publication date: 13 July 2022
Publisher: Springer Nature Switzerland AG

This comprehensive book delves into the realm of economic efficiency, presenting a unified and extended definition and measurement framework. It serves as a valuable tool for real-life benchmarking within organizations, utilizing the economic theory of duality as its guiding framework. Through empirical analysis, the book showcases how alternative models can be implemented using Data Envelopment Analysis (DEA). An accompanying software programmed in the open-source Julia language is provided to solve these models, making it accessible for individual learning and instruction. The package consists of self-contained functions that facilitate learning and teaching. Additionally, the source code, associated documentation, and replication notebooks are readily available online.

The book explores the concept of economic efficiency at the firm level, comparing observed performance to optimal economic outcomes. It decomposes economic efficiency into technical and allocative criteria, depending on the chosen technical efficiency measure. Part I of the book focuses on the classic multiplicative approach, decomposing cost and revenue efficiency based on radial distance functions. It then extends these partial approaches to profitability efficiency, considering both input and output dimensions of the firm and utilizing the generalized distance function for measuring technical efficiency.

Part II of the book delves into the recent additive framework related to the decomposition of economic inefficiency defined in terms of cost, revenue, and profit. It presents economic models for various measures, including the Russell and enhanced graph Russell measures, the weighted additive distance function, the directional distance function, the modified directional distance function, and the Hölder distance function. Each model is accompanied by detailed explanations and illustrative examples, making the book an invaluable resource for scholars and practitioners in the field of economic efficiency.

Weight: 1172g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030843960
Edition number: 1st ed. 2022