Ranking production units according to marginal efficiency contribution

Mojtaba Ghiyasi, Jens Leth Hougaard

Abstract

League tables associated with various forms of service activities from schools to hospitals illustrate the public need for ranking institutions by their productive performance. We present a new method for ranking production units which is based on each units marginal contribution to the technical efficiency of various “mergers” relative to a common reference technology. The approach is radically different from the usual one based on super-efficiency indexes in DEA. We illustrate the mechanics of our method by a series of numerical examples and further demonstrate that our new index inherits all relevant and desirable properties of the Farrell efficiency index upon which it is constructed.
Original languageEnglish
PublisherDepartment of Food and Resource Economics, University of Copenhagen
Number of pages21
Publication statusPublished - 2014
SeriesMSAP Working Paper Series
Number04/2014

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