Bernd Ebersberger, Uwe Cantner, Horst Hanusch
Analyzing Inefficiency Using a Frontier Search Approach
Abstract:
Efficiency measurement naturally requires the definition of a frontier
as a benchmark indicating efficiency. Usually a measure reflecting the
distance of a data point to the frontier indicates the level of
efficiency.
One of the crucial characteristics to distinguish efficiency
measurement
tools is the way in which they construct the frontier. The class of
deterministic
and non parametric tools of constructing the frontier mainly comprises
of tools associated with Data Envelopment Analysis.
Coming in various flavors all DEA frontiers suffer of their piecewise
construction giving rise to numerous vertices. Those vertices do not
allow
convenient analysis of the frontier properties such as computing
elasticities
and the like. In this paper we want to contribute to the class of
deterministic
and non parametric tools of constructing the frontier in an one output
and n input setting. We suggest a new empirical approach drawing on
functional
search in the fashion of Koza's (1992) genetic programming. The
frontier
search algorithm employed evolves the functional form of the frontier
and
the parameters simultaneously. The frontier exhibits the neat property
that it is smooth and differentiable enabling the computation of
elasticities,for
example.
In particular we introduce both the idea and the algorithm of the
frontier
search procedure. We discuss the advantages and shortcomings with
respect
to empirical problems. The arguments brought forth in the preceding
sections
are illustrated by the investigation of an artificial example.
JEL: C14, C49, D24
Paper:
Paper available as pdf-file.
Beitrag Nr. 199, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Bernd Ebersberger, University of Augsburg, Department of Economics,
Universitätsstr. 16, D-86159 Augsburg, Phone +49-821-598-4179, Fax
+49-821-598-4229
Uwe Cantner, University of Augsburg, Department of Economics,
Universitätsstr. 16, D-86159 Augsburg, Phone +49-821-598-4179, Fax
+49-821-598-4229
Horst
Hanusch, University of Augsburg, Department of Economics,
Universitätsstr. 16, D-86159 Augsburg, Phone +49-821-598-4179, Fax
+49-821-598-4229
E-Mail: horst.hanusch@wiwi.uni-augsburg.de
v.
K., 12.12.2000