A Review of Measuring Inefficiency Models

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KHIABANI NASSER; Zomorrodi Mahdieh

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Journal Paper

Paper Information

Journal: THE JOURNAL OF PLANNING AND BUDGETING Year:2023 | Volume:28 | Issue:1 Page(s): 3-30

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Information Journal Paper

Title

A Review of Measuring Inefficiency Models

Author(s)

KHIABANI NASSER | Zomorrodi Mahdieh | Issue Writer Certificate

Keywords

Technical EfficiencyQ4

Distributive EfficiencyQ4

Stochastic Frontier ProductionQ4

Trans-log Cost Function SystemQ4

Bayesian ApproachQ4

Abstract

An inefficient firm causes a waste of resources by using a non-optimal combination of capital and labor and especially energy. Measuring inefficiency and identifying the factors that cause it is vital in achieving the firm's potential production and, as a result, the sustainability of economic growth and increasing the economic well-being of the society. Meanwhile, choosing the right model to measure inefficiency is always one of the basic challenges among researchers in this field. This study attempts to provide an overview of the concept of efficiency and its types and different measurement models with an emphasis on the Frontier Analysis. Considering the large volume of theoretical and experimental studies in inefficiency, our review aims to provide a proper understanding of their strengths and weaknesses by investigating the evolution of the models demonstrated in the literature, and thus helps the researcher to create a clear framework for analysis and choosing the appropriate model. Furthermore, this study offers suggestions to measure inefficiency as accurately as possible from the theoretical and technical viewpoints, which have been understudied in the literature.

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