[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/qld/uqcepa/179.html
   My bibliography  Save this paper

A Comment on Decomposition of Efficiency in Network Production Models

Author

Listed:
  • Antonio Peyrache

    (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia)

  • Maria C. A. Silva

    (CEGE - Cat´olica Porto Business School, Rua Diogo Botelho, 1327, 4169-005 Porto, Portugal.)

Abstract
Kao (2012) proposed a method to decompose DMU efficiency into sub-unit efficiencies for parallel production systems. We provide a numerical example showing that the proposed method can yield negative sub-unit efficiency scores under variable returns to scale, against common sense and standard postulates requiring this score to be non-negative. As a solution, we propose a decomposition based on the directional distance function that does not suffer from this problem and can be also applied to non-convex technologies, therefore providing a more general method to implement such a decomposition. Given the connection between the directional distance function and slack-based efficiency measurement, the method can easily be extended to this case as well.

Suggested Citation

  • Antonio Peyrache & Maria C. A. Silva, 2022. "A Comment on Decomposition of Efficiency in Network Production Models," CEPA Working Papers Series WP072022, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:179
    as

    Download full text from publisher

    File URL: https://economics.uq.edu.au/files/35882/WP072022.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kao, Chiang, 2009. "Efficiency decomposition in network data envelopment analysis: A relational model," European Journal of Operational Research, Elsevier, vol. 192(3), pages 949-962, February.
    2. Kao, Chiang, 2013. "Dynamic data envelopment analysis: A relational analysis," European Journal of Operational Research, Elsevier, vol. 227(2), pages 325-330.
    3. Pachkova, Elena V., 2009. "Restricted reallocation of resources," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1049-1057, August.
    4. Antonio Peyrache & Maria C. A. Silva, 2021. "Multi-Level Parallel Production Networks," CEPA Working Papers Series WP052021, School of Economics, University of Queensland, Australia.
    5. Walter Briec & Kristiaan Kerstens, 2006. "Input, output and graph technical efficiency measures on non-convex FDH models with various scaling laws: An integrated approach based upon implicit enumeration algorithms," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 14(1), pages 135-166, June.
    6. Podinovski, V. V., 2004. "On the linearisation of reference technologies for testing returns to scale in FDH models," European Journal of Operational Research, Elsevier, vol. 152(3), pages 800-802, February.
    7. Kao, Chiang, 2019. "Inefficiency identification for closed series production systems," European Journal of Operational Research, Elsevier, vol. 275(2), pages 599-607.
    8. Kao, Chiang, 2020. "Decomposition of slacks-based efficiency measures in network data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 283(2), pages 588-600.
    9. C Kao, 2012. "Efficiency decomposition for parallel production systems," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(1), pages 64-71, January.
    10. Kao, Chiang, 2018. "Multiplicative aggregation of division efficiencies in network data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 270(1), pages 328-336.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonio Peyrache & Maria C. A. Silva, 2023. "Efficiency decomposition for multi-level multi-components production technologies," Journal of Productivity Analysis, Springer, vol. 60(3), pages 273-294, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peyrache, Antonio & Silva, Maria C.A., 2024. "The decomposition of efficiency in parallel network production models," Omega, Elsevier, vol. 127(C).
    2. Antonio Peyrache & Maria C. A. Silva, 2022. "Efficiency and Productivity Analysis from a System Perspective: Historical Overview," Springer Books, in: Duangkamon Chotikapanich & Alicia N. Rambaldi & Nicholas Rohde (ed.), Advances in Economic Measurement, chapter 0, pages 173-230, Springer.
    3. Antonio Peyrache & Maria C. A. Silva, 2023. "Efficiency decomposition for multi-level multi-components production technologies," Journal of Productivity Analysis, Springer, vol. 60(3), pages 273-294, December.
    4. Kremantzis, Marios Dominikos & Beullens, Patrick & Kyrgiakos, Leonidas Sotirios & Klein, Jonathan, 2022. "Measurement and evaluation of multi-function parallel network hierarchical DEA systems," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).
    5. Kao, Chiang, 2016. "Efficiency decomposition and aggregation in network data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 255(3), pages 778-786.
    6. Antonio Peyrache & Maria C. A. Silva, 2019. "The Inefficiency of Production Systems and its decomposition," CEPA Working Papers Series WP052019, School of Economics, University of Queensland, Australia.
    7. Kao, Chiang, 2020. "Decomposition of slacks-based efficiency measures in network data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 283(2), pages 588-600.
    8. Kao, Chiang, 2014. "Network data envelopment analysis: A review," European Journal of Operational Research, Elsevier, vol. 239(1), pages 1-16.
    9. Tavakoli, Ibrahim M. & Mostafaee, Amin, 2019. "Free disposal hull efficiency scores of units with network structures," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1027-1036.
    10. Kao, Chiang, 2014. "Efficiency decomposition in network data envelopment analysis with slacks-based measures," Omega, Elsevier, vol. 45(C), pages 1-6.
    11. Kao, Chiang, 2014. "Efficiency decomposition for general multi-stage systems in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 232(1), pages 117-124.
    12. Kristiaan Kerstens & Ignace Van de Woestyne, 2018. "Enumeration algorithms for FDH directional distance functions under different returns to scale assumptions," Annals of Operations Research, Springer, vol. 271(2), pages 1067-1078, December.
    13. Chen, Ya & Pan, Yongbin & Liu, Haoxiang & Wu, Huaqing & Deng, Guangwei, 2023. "Efficiency analysis of Chinese universities with shared inputs: An aggregated two-stage network DEA approach," Socio-Economic Planning Sciences, Elsevier, vol. 90(C).
    14. Antonio Peyrache, 2024. "A Homothetic and Additively Separable Production Frontier," CEPA Working Papers Series WP012024, School of Economics, University of Queensland, Australia.
    15. Phung, Manh-Trung & Cheng, Cheng-Ping & Guo, Chuanyin & Kao, Chen-Yu, 2020. "Mixed Network DEA with Shared Resources: A Case of Measuring Performance for Banking Industry," Operations Research Perspectives, Elsevier, vol. 7(C).
    16. Xiao, Huijuan & Wang, Daoping & Qi, Yu & Shao, Shuai & Zhou, Ya & Shan, Yuli, 2021. "The governance-production nexus of eco-efficiency in Chinese resource-based cities: A two-stage network DEA approach," Energy Economics, Elsevier, vol. 101(C).
    17. Kao, Chiang & Liu, Shiang-Tai, 2019. "Cross efficiency measurement and decomposition in two basic network systems," Omega, Elsevier, vol. 83(C), pages 70-79.
    18. Alizadeh, Reza & Gharizadeh Beiragh, Ramin & Soltanisehat, Leili & Soltanzadeh, Elham & Lund, Peter D., 2020. "Performance evaluation of complex electricity generation systems: A dynamic network-based data envelopment analysis approach," Energy Economics, Elsevier, vol. 91(C).
    19. Kao, Chiang, 2018. "Multiplicative aggregation of division efficiencies in network data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 270(1), pages 328-336.
    20. Kao, Chiang, 2019. "Inefficiency identification for closed series production systems," European Journal of Operational Research, Elsevier, vol. 275(2), pages 599-607.

    More about this item

    Keywords

    DEA; FDH; Networks; Directional Distance Function; Inefficiency;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qld:uqcepa:179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SOE IT (email available below). General contact details of provider: https://edirc.repec.org/data/decuqau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.