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Abstract

This paper assesses the dynamic inefficiency of the Polish meat processing industry during the period between 2004 and 2012. This study employs also a comparison of dynamic with static inefficiency measures to address the importance of accounting for adjustment costs when measuring a firm's inefficiency. Dynamic and static cost inefficiencies and their decomposition into technical, allocative, and scale inefficiency are derived using Data Envelopment Analysis. Results showed that firms' low levels of dynmaic cost inefficiency were due to dynamic allocative inefficiency rather than technical and scale inefficiency. The 2008 financial crisis appears to have hampered firms' dynamic technical performance, but has also had a positive influence on the dynamic allocative and scale inefficiencies. WE further show that the average static measures tend to underestimate all inefficiency compenents compared to dynmaic counterparts.

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