This thesis is concerned with measuring and explaining the productive efficiency of
firms or organizations. In particular, the study compares three alternative methods of
measuring efficiency, namely, the deterministic frontier method, the stochastic frontier
method, and the data envelopment analysis method (DEA).
The dissertation consists of two parts. In Part I, the relative merits of the three
methods are discussed and evaluated through a Monte Carlo study under certain known
conditions. The study focuses on the effects of exogenous variables on efficiency estimates.
The results show that the stochastic frontier method generally produces better efficiency
estimates than the other two methods. The DEA, however, has a slight advantage in cases
where there are weak input substitution and large variations in input variables. In Part II,
the three methods are examined empirically through their applications to a panel of 19
railways in OECD countries and a panel of 36 international airlines. Comparison of the
three sets of efficiency estimates confirms that on average the stochastic frontier method
yields higher efficiency estimates than the other two methods, as indicated by the Monte
Carlo results. The efficiency estimates by the two parametric methods are highly correlated,
whereas there are considerable differences between the DEA estimates and those from the
parametric methods. This is also consistent with the Monte Carlo results. By comparing the
alternative efficiency estimates in the two applications, it is found that there is less
discrepancy among the three sets of efficiency estimates in the airline case than in the
railway case. This can be partly attributed to the fact that there are fewer variations in the operating environments in the airline case than in the railway case.
The simulation results in Part I provide some general guidelines regarding the relative
merits of the three alternative methods under certain known conditions. The two applications
of the three methods in Part II serve as examples of how these three methods can be applied
to practical problems where no a priori knowledge of either the production technology nor
the efficiency profile exists. They illustrate some of the problems that may be encountered
in empirical applications. / Business, Sauder School of / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/8829 |
| Date | 05 1900 |
| Creators | Yu, Chunyan |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Format | 5641691 bytes, application/pdf |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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