Measuring productive efficiency: an econometric survey

Abstract

Although neglected by earlier economic literature, productive efficiency analysis has recently been the object of a number of theoretical and empirical studies in developed and developing countries with crucial implications for economic policy making. Inefficiency is costly, both to the individual producer and to society at large. The cost of inefficiency is basically an empirical question, but reliable answers to this question require an extensive econometric investigation at the theoretical level. This paper surveys in a brief but comprehensive way the most important recent econometric developments for the estimation of productive efficiency measures.