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Abstract

This paper was conceived as an extension of the contribution by Kopp (1981) in developing an approach to efficiency measure that synthesizes. Farrell efficiency measure and the frontier production function. The extension is in the aspect of providing a measure for comparing productive efficiency differential between two groups of firms existing in the same competitive industry. To test the efficiency differential, we proposed the Mann-Whitney Test Statistic. As an illustration of the proposed measure, we used data from three Malaysian agricultural processing industries, that is, rice milling, rubber remilling and oilpalm processing. In the exercise, we estimated and test the technical efficiency differential between private and public firms in each industry and found that in rice milling and rubber remilling, private firms are technically more efficiency than their public counterpart. In oilpalm processing, the two groups of firms are equally efficient (or equally inefficient).

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