Abstract
The purpose of this paper is to measure productive efficiencies when a firm employs quasi-fixed inputs that cannot be instantaneously adjusted to their optimal levels. To this end, data envelopment analysis (DEA) is extended to a dynamic framework so that investment behavior can be modelled with the efficient production frontier. Based on the work of Nemoto and Goto (1999), we show how the efficiencies of quasi-fixed inputs and their adjustment processes are evaluated. An application to Japanese electric utilities over the 1981–1995 period delivers empirically plausible results and proves the usefulness of the procedure.
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Nemoto, J., Goto, M. Measurement of Dynamic Efficiency in Production: An Application of Data Envelopment Analysis to Japanese Electric Utilities. Journal of Productivity Analysis 19, 191–210 (2003). https://doi.org/10.1023/A:1022805500570
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DOI: https://doi.org/10.1023/A:1022805500570