CoPS/IMPACT Working Paper Number G-134

Title: The Measurement Of Efficiency Where There Are Multiple Outputs

Author: John L. Whiteman


This paper is motivated by the empirical observation that in many studies the elasticity of output with respect to labour is often negative and/or insignificant. The present study applies multiple output models to estimate the technical efficiency of enterprises in the international electricity, gas and telecom-munications industries. The results support the contention that single output production models may yield misleading results in respect of the elasticities of inputs such as labour. The results also suggest that relatively simple DEA and ordinary least squares models may be preferred to more complex stochastic frontier models in estimating the technical efficiency of enterprises.

JEL classification: D24, L94, L95, L96

Keywords: multiple output, data envelopment analysis, stochastic production frontier, distance function, ray frontier, technical efficiency.

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