Abstract
This paper presents a method for decomposing the deviations from a full frontier cost function into Farrell (1957) measures of technical and allocative efficiency. The method draws heavily on duality theory and requires no direct knowledge of the primal production frontier specification or its parameters. Thus, the method is applicable to a broad class of cost functions, including flexible functions such as the translog, which do not possess analytically derivable underlying production functions. The method easily generalizes to joint output production technologies where the decomposition of deviations from frontier profit functions would provide measures of technical, allocative, output mix and scale efficiency.
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