Event-specific Data Envelopment Models and Efficiency Analysis

Most, if not all, production technologies are stochastic. This article demonstrates how data envelopment analysis (DEA) methods can be adapted to accommodate stochastic elements in a state-contingent setting. Specifically, we show how observations on a random input, not under the control of the producer and not known at the time that variable input decisions are made, can be used to partition the state space in a fashion that permits DEA models to approximate an event-specific production technology. The approach proposed in this article uses observed data on random inputs and is easy to implement. After developing the event-specific DEA representation, we apply it to a data set for Western Australian wheat farmers. Our results highlight the need for acknowledging stochastic elements in efficiency analysis.


Issue Date:
2005
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/151185
PURL Identifier:
http://purl.umn.edu/151185
Total Pages:
21
JEL Codes:
O
Series Statement:
Risk and Uncertainty Program
R07/8




 Record created 2017-04-01, last modified 2018-01-22

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