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Radial and nonradial measures of technical efficiency: An empirical illustration for Belgian local governments using an FDH reference technology

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Abstract

This paper serves two purposes. First, we argue that radial efficiency measures are inappropriate for the Free Disposal Hull (FDH) technology, and we provide a comparative analysis of alternative nonradial measures. In particular, using information on Belgian local government expenditures and output indicators we implement various radial and nonradial measures on the FDH reference technology, and we investigate to which extent these efficiency measures imply different distributions and rankings. Second, we analyze the patterns of measured technical efficiency implied by the various indices. Specifically, we investigate whether different measures make any substantial difference for the explanation of the calculated inefficiencies. The empirical results suggest that more important differences in rankings exist between radial and nonradial measures than between different nonradial alternatives; moreover, the radial and the nonradial efficiency measures do yield a somewhat different pattern of explanation.

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Authors and Affiliations

  1. University of Antwerp, UFSIA-SESO, B-2000, 13, Prinsstraat, Antwerp, Belgium

    Bruno De Borger

  2. University of Antwerp, UFSIA-SESO, B-2000, 13, Prinsstraat, Antwerp, Belgium

    Kristiaan Kerstens

Authors
  1. Bruno De Borger
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  2. Kristiaan Kerstens
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Additional information

This is a revision of a paper presented at the 38th Conference of the Applied Econometrics Association in Athens (April 12–13, 1993). Comments of R. Goudriaan, Henry Tulkens, and two anonymous referees are gratefully acknowledged.

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De Borger, B., Kerstens, K. Radial and nonradial measures of technical efficiency: An empirical illustration for Belgian local governments using an FDH reference technology. J Prod Anal 7, 41–62 (1996). https://doi.org/10.1007/BF00158476

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