Dynamic Efficiency Measurement: Theory and Application

Abstract

Nonparametric dynamic measures of production efficiency are developed in the context of an adjustment-cost technology and intertemporal cost minimization. Bounds on each efficiency measure are derived for each firm using a nonparametric revealed preference approach. Long-run efficiency measures indicate the relative efficiency of both variable and dynamic factors while short-run measures of efficiency indicate whether variable inputs are employed efficiently in the production process. The efficiency measures are temporal in nature by describing the degree of efficiency of the firm at a particular point along its adjustment path. The empirical implementation is illustrated for a balanced panel of Pennsylvania dairy operators during 1986&-1992. Copyright 2007, Oxford University Press.

Analyzing the impact of investment spikes on dynamic productivity growth

“…In the adjustment-cost perspective, Silva and Stefanou (2007) use a nonparametric dynamic Data Envelopment Analysis (DEA) to describe the input requirement set in the context of dynamic cost minimization to measure efficiency hyperbolically for Pennsylvanian farms over a six year period, while Kapelko et al 4 (2014a) measure dynamic efficiency for the Spanish construction industry in the directional distance function context. The adjustment cost perspective is also assumed in the study of Fallah-Fini et al (2015) who model intertemporal dependencies between consumption of inputs and realization of outputs in highway maintenance operations.…”

Dynamic Cost Efficiency in Port Infrastructure Using a Directional Distance Function: Accounting for the Adjustment of Quasi-Fixed Inputs Over Time

“…The literature on dynamic efficiency measurement is relatively recent and for the most part researchers have used a data envelopment analysis (DEA) approach (Nemoto and Goto 2003;Silva and Stefanou 2007;Silva and Lansink 2013). In the parametric literature, Rungsuriyawiboon and Stefanou (2007) generate allocative and technical efficiency measures in an intertemporal decision-making framework using a shadow cost approach.…”

Primal and dual dynamic Luenberger productivity indicators

“…In a nonparametric setting, Silva and Stefanou (2007) develop a myriad of efficiency measures associated with the dynamic generalization of the dual-based revealed preference approach to production analysis found in Silva and Stefanou (2003). In a parametric setting, Rungsuriyawiboon and Stefanou (2007) present and estimate the dynamic shadow price approach to dynamic cost minimization.…”