Abstract
This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.
| Original language | English |
|---|---|
| Pages (from-to) | 183-200 |
| Number of pages | 18 |
| Journal | Journal of Productivity Analysis |
| Volume | 17 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2002 |
| Externally published | Yes |
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Keywords
- Data envelopment analysis
- Electricity distribution sector
- Nonparametric efficiency analysis
- Performance evaluation under uncertainty
- Stochastic dominance
ASJC Scopus subject areas
- Business and International Management
- Economics and Econometrics
- Social Sciences (miscellaneous)
Cite this
Nonparametric efficiency analysis under price uncertainty : A first-order stochastic dominance approach. / Kuosmanen, Timo; Post, Thierry.
In: Journal of Productivity Analysis, Vol. 17, No. 3, 2002, p. 183-200.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Nonparametric efficiency analysis under price uncertainty
T2 - A first-order stochastic dominance approach
AU - Kuosmanen, Timo
AU - Post, Thierry
PY - 2002
Y1 - 2002
N2 - This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.
AB - This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices. We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD conditions, which require minimal assumptions concerning the preferences of the decision-maker and the statistical distribution of the prices. From operational point of view, the FSD conditions can be tested empirically using standard mathematical programming techniques. An empirical application to the Dutch electricity distribution sector illustrates the approach.
KW - Data envelopment analysis
KW - Electricity distribution sector
KW - Nonparametric efficiency analysis
KW - Performance evaluation under uncertainty
KW - Stochastic dominance
UR - http://www.scopus.com/inward/record.url?scp=0036286051&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0036286051&partnerID=8YFLogxK
U2 - 10.1023/A:1015037719942
DO - 10.1023/A:1015037719942
M3 - Article
AN - SCOPUS:0036286051
VL - 17
SP - 183
EP - 200
JO - Journal of Productivity Analysis
JF - Journal of Productivity Analysis
SN - 0895-562X
IS - 3
ER -