Bias Free Measurement of Technical Efficiency

Kaliappa Kalirajan, Shashanka Bhide

    Research output: Contribution to journalArticle

    Abstract

    Technical efficiency, which is a measure of production performance of a firm, has been estimated generally using a primal production frontier. Since the estimation is carried out for a given level of inputs, the efficiency measure includes the effect of 'input-mix' or 'input-allocation' and consequently, the technical efficiency estimate is biased. The objectives of this paper are to gauge the magnitude of 'input-mix' bias in technical efficiency estimate and to suggest a method to measure technical efficiency eliminating the bias. The workability of the suggested method is demonstrated through an empirical analysis using agricultural data from India covering the period 1970-1993.
    Original languageEnglish
    Pages (from-to)523-533
    JournalJournal of Applied Statistics
    Volume33
    Issue number5
    DOIs
    Publication statusPublished - 2006

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