Arbeitspapier

Allocative efficiency measurement revisited: Do we really need input prices?

The traditional approach to measuring allocative efficiency is based on input prices, which are rarely known at the firm level. This paper proposes a new approach to measure allocative efficiency which is based on the output-oriented distance to the frontier in a profit?technical efficiency space-and which does not require information on input prices. To validate the new approach, we perform a Monte-Carlo experiment which provides evidence that the estimates of the new and the traditional approach are highly correlated. Finally, as an illustration, we apply the new approach to a sample of about 900 enterprises from the chemical industry in Germany.

Language
Englisch

Bibliographic citation
Series: Working Paper Series ; No. 2006,7

Classification
Wirtschaft
Organization of Production
Chemicals; Rubber; Drugs; Biotechnology; Plastics
Allocative Efficiency; Cost-Benefit Analysis
Firm Performance: Size, Diversification, and Scope
Subject
allocative efficiency
data envelopment analysis
frontier analysis
technical efficiency
Monte-Carlo study
chemical industry

Event
Geistige Schöpfung
(who)
Badunenko, Oleg
Fritsch, Michael
Stephan, Andreas
Event
Veröffentlichung
(who)
European University Viadrina, The Postgraduate Research Programme: Capital Markets and Finance in the Enlarged Europe
(where)
Frankfurt (Oder)
(when)
2006

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Badunenko, Oleg
  • Fritsch, Michael
  • Stephan, Andreas
  • European University Viadrina, The Postgraduate Research Programme: Capital Markets and Finance in the Enlarged Europe

Time of origin

  • 2006

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