Input-oriented Technical Efficiency Research Articles

The economic impact of E-commerce on the U.S. airports: Cost savings and productivity growth

The rise of e-commerce, fueled by digitalization and shifting in consumer demand, has revolutionized air cargo. While all e-commerce stakeholders are engaged in fierce competition to increase their market share, airports as integral elements of the air cargo supply chain could not be apathetic to this competition. This study examines the economic implication of e-commerce on high cargo volume airports, focusing on cost savings and productivity growth. Utilizing the Farrell measure of input-oriented technical efficiency, we estimate scope economies for the U.S. airports between 2009 and 2019. The results reveal higher scope economies for high cargo volume airports, indicating greater cost savings resulting from e-commerce activities. In addition, the Malmquist index is employed to assess productivity growth. The index is decomposed into technical change, efficiency change, and scale change. The findings show a 3.3% overall productivity growth in the U.S. airport industry, primarily driven by technical change. Besides, high cargo volume airports exhibit higher productivity growth compared to low cargo volume airports, with 4.1% and 2.9% growth rates, respectively. The gap between high cargo volume and low cargo volume airports widened in 2017, aligning with the pre-pandemic peak in e-commerce activity. Furthermore, high cargo volume airports experience higher efficiency gains and technical advancements. While efficiency gains are attributed to improved performance and increased capacity utilization, the technical advancements can be explained by the digitalization and customized operations associated with e-commerce. Overall, the results highlight the significant contribution of e-commerce to cost savings and productivity growth in high-cargo volume airports.

Factors Influencing Technical Efficiency of Paddy Farms in Mullaitivu District: Non – Parametric Approach

Technical efficiency means the effectiveness which a given set of inputs used to produce a given output and it helps to produce the maximum output using minimum quantity of inputs for any firm or farm products. The objectives of this study are to estimate the Hicks – Moorsteen index and examine the impact of demographic, economic, farming and environmental characteristics on total factor productive efficiency index. Further, this study evaluate the overall performance of paddy farmers (n= 200) and identify the factors affecting the efficiency using two – stage Data Envelopment Analysis (DEA) during 2019/2020 period in Mullaitivu district of Sri Lanka. Hicks – Moorsteen index showed that among the components of the index, 94% of the highest mean value was attained in Input Oriented Technical Efficiency (ITE) followed by 93% of efficiency was attained in Output Oriented Scale Efficiency (OSE). Tobit regression results suggested that education, availability of training and destroy the crops whether the crops were damaged by environmental factors were significantly affecting the Hicks – Moorsteen index. Further, results of two – stage input-oriented DEA revealed that on average the overall technical efficiency of paddy farms was nearly 42%, scale efficiency was nearly 45% and variable returns to scale technical efficiency was nearly 93%. The Tobit regression results showed that, education, land ownership, amount of savings, loan size, land quality and farm income were positively impact on overall technical efficiency while experience, ownership of land, amount of savings and destroy the crops whether the crops were damaged by environmental factors significantly affected on technical efficiency. Conversely, scale efficiency of paddy farming mostly influenced by education, land ownership, saving amount, loan size, quality of land and farm. The paper concludes that both input oriented technical efficiency and output oriented scale efficiency need to be improved further as well as scale efficiency mostly affected by economic and farming characteristics in the study.

Trade and efficiency of manufacturing industries in South Africa

ABSTRACTThis paper advances and empirically tests the hypothesis that trade raises input-oriented technical efficiency through cost saving practices that reduce cost inefficiencies. Using a primal and dual True-Fixed-Effects (TFE) stochastic frontier approach on a panel dataset comprising 28 manufacturing industries in South Africa between 1970 and 2016 at 3-digit level, it found average technical and cost efficiency values of 0.83 and 0.33 respectively indicating that the industries operated 33% above their cost minimising level and could have reduced their input usage by 17% without compromising their output level. Empirical findings then confirmed a significant positive effect of import penetration and export intensity on technical efficiency that operates through reduction of cost inefficiencies. These findings do not only support our proposed hypothesis; they also corroborate the idea that competition from global trade forces local industries to rationalise their operations and give up production practices that are not consistent with the cost minimisation objective. The Department of Trade and Industry (DTI) might find these results useful as they suggest that a less restrictive trade policy that promotes exports and imports has the potential to improve resource utilisation within the manufacturing sector through downward cost adjustments.

Technical Efficiency of Microfinance Institutions in India:Data Envelopment Analysis

In the present study the average data of six consecutive years have been used to measure the technical efficiency of Microfinance Institutions (MFIs). The study revealed that there were three efficient MFIs under Constant Returns to Scale (CRS) and five efficient MFIs under Variable Returns to Scale (VRS) assumption. Average input-oriented Technical Efficiency (TE), Pure Technical Efficiency (PTE) and Scale Efficiency (SE) worked out to be 37.4, 52.5 and 70.2 per cent, respectively. The corresponding figures under output- oriented measures were estimated to be 37.4, 45.3 and 85 per cent, respectively. It was found that 84 per cent of the MFIs studied in India were enjoying economies of scale under input-oriented measure, whereas only 36 per cent MFIs studied experienced economies of scale under output-oriented measure. Further it was found that majority of the selected MFIs, i.e., more than 3/4 MFIs have PTE less than or equal to 70 per cent under both the input and output oriented measures. Only 28 per cent of the selected units have PTE above 80 per cent efficiency level under input-oriented measures and 20 per cent under output measures. Tobit model, to explain the variability of individual efficiency measures, shows that 65 per cent of the variation in the technical efficiency is explained by the independent variables included in the model.

Resource use efficiency and economic losses: implications for sustainable rice production in Vietnam

The study aimed to estimate resource use efficiency and economic losses by using stochastic frontier analysis. The data set were collected in An Giang Province of Vietnam through personal interviews with 199 rice farmers. The results revealed that returns to scale are decreasing. Rice farmers had high levels of output-oriented and input-oriented technical efficiency with the means of 91.92 and 85.39 %, respectively. The mean environmental efficiency was 82.03 %. The mean efficiency of normal inputs was 61.20 %. Among the bad inputs, pesticide and energy were the least efficient ones with the mean values of 51.39 and 45.53 %, respectively, indicating serious overuses of these inputs. As regards normal inputs, capital had the lowest efficiency score at 21.08 %, followed by seed quantity at 26.4 %. Further, the total economic losses were estimated at 8261 thousand VND (380 USD) per hectare, which is equal to the sales of about 1600 kg of rice per hectare or the efforts to increase by 20 % of output level. This study suggests that rice farmers need to contract inputs, particularly environmentally detrimental inputs to improve profits. To improve the productive efficiency, the use of ecological engineering, collective pump and cultivation of three rice crops per year are possible options.

Resource Use Efficiency of Tea Production in Vietnam: Using Translog SFA Model

As one of the most important economic activities to small households of Vietnam, tea production is hindered by low productivity, rising of production costs, and bad agriculture practices. To sustain tea production, the near-term strategy is to improve the efficiency of resource utilization. To our knowledge, this article is the first study to evaluate the tea production’s resource use efficiency and to identify the factors affecting it in Vietnam. The data was collected from 243 randomly selected tea farmers in the Northern mountainous region of Vietnam. The study first applied a translog stochastic production frontier model and technical efficiency (TE) technique to estimate resources use efficiency, and then used a Tobit model to identify the factors affecting these efficiencies among tea farms. Based on the mean sum of output elasticity with respect to inputs (0.323), we found that increasing the utilization of resources in the study site was inappropriate. The study also revealed that the average input-oriented TE of tea farms was lower than that of output-oriented TE, 82.21% versus 92.29%, suggesting that the farmers had more ability to reduce resource use than to increase current output level. The results showed that the tea farmers could use resources more efficiently by reducing 17.79% of the current application level without compromising the output. The study also indicates that concerted efforts from government to increase farmers’ accessing extension service, widening soil and water conservation practice, and spreading farmers’ awareness on water scarcity is the key to improve farmers’ resource use efficiency.

How Efficiently is Chemical Fertilizer Used in Indian Agriculture? Challenges and Alternatives

Chemical fertilizer is one of the main inputs in Indian agriculture. The objective of the article is to study the efficiency of chemical fertilizer use in India over five decades (1962–65 to 2003–06). This period extends from the pre-green revolution to the post-reform era. Chemical fertilizer use is not uniform and efficient throughout the Indian states. For the purposes of this study, the districts of four states, Andhra Pradesh, Gujarat, Punjab and West Bengal, have been selected, representing the southern, western, northern and eastern regions, respectively. Data envelopment analysis technique is used to gauge the input-oriented technical efficiency. The results show that there is substantial scope for reducing the use of fertilizer.

Some Recent Developments in Efficiency Measurement in Stochastic Frontier Models

This paper addresses some of the recent developments in efficiency measurement using stochastic frontier (SF) models in some selected areas. The following three issues are discussed in details. First, estimation of SF models with input‐oriented technical efficiency. Second, estimation of latent class models to address technological heterogeneity as well as heterogeneity in economic behavior. Finally, estimation of SF models using local maximum likelihood method. Estimation of some of these models in the past was considered to be too difficult. We focus on the advances that have been made in recent years to estimate some of these so‐called difficult models. We complement these with some developments in other areas as well.

한국 근해 쌍끌이 대형기선저인망어선의 규모별 효율성과 어회능력 활용도 평가

To propose proper vessel characteristics for sustainable fisheries in Korean waters, we analyzed the fishing capacity, scale efficiency and utilization of large pair-trawl vessels based on the database of catch, effort and vessel characteristics (gross tonnage and engine power) in 1990 by applying data envelopment analysis (DEA). The input factors were gross tonnage, horse power and days operated; whereas the output factor was expected catch by vessel characteristics. The optimal vessel types, selected based on the input-oriented technical efficiency and gross tonnages, was 100 GT with engine power <600 HP. The output-oriented unbiased estimate of capacity utilization (CD) decreased with increasing vessel tonnage. For the same tonnage vessels, the CD decreased with increasing engine power.

Estimation of stochastic frontier production functions with input-oriented technical efficiency

This paper deals with estimation of input-oriented (IO) technical inefficiency using a stochastic production frontier model. Econometrically the model is similar to a class of models that arise in specifying technical inefficiency in cost-minimizing and profit-maximizing frameworks. The standard maximum likelihood (ML) method that is used to estimate output-oriented (OO) technical efficiency cannot be applied to estimate these models. We use a simulated ML approach to estimate the IO production function and compare results from the IO and OO models, mainly to emphasize the point that estimated efficiency, returns to scale, technical change, etc., differ depending on whether one uses the model with IO or OO technical inefficiency.

ENVIRONMENTAL EFFICIENCY OF THE AUSTRALIAN IRRIGATION INDUSTRY IN TREATING SALT EMISSIONS

In this paper, a stochastic translog production function frontier is specified to estimate the input‐oriented technical efficiency of 11 major Australian irrigation schemes. The analysis is applied to a panel data set including the years 1998/1999, 1999/2000 and 2000/2001. The environmental efficiency of each sampled irrigation scheme in relation to treating salt emissions is measured. These EE measures are based on estimates of technical efficiency. The potential reduction of the environmentally detrimental salt emissions resulting from the improvement of environmental inefficiency is estimated. The study indicates that the sampled schemes operated at an average of 80.4% (1998/1999), 89.9% (1999/2000) to 95% (2000/2001) of full environmental efficiency. The potential contraction of salt emission is substantial. The paper also reveals that there is a wide range of EE scores in each year suggesting differences in the management performance of the salt emission problem across individual schemes.

Nitrogen efficiency of Dutch dairy farms: a shadow cost system approach

In this paper we analyse the cost efficiency and nitrogen efficiency of an unbalanced panel of Dutch dairy farms. Nitrogen efficiency is defined as the ratio of minimal to observed use of nitrogen (N-containing inputs), conditional on output and quasi-fixed inputs. Nitrogen efficiency is computed in a shadow cost system framework. Nitrogen-efficient production is found at the optimal mix of variable inputs, determined by the nitrogen content of these inputs. The optimal nitrogen content ratio is introduced using price distortion factors in the estimated cost function. The mean input-oriented technical efficiency is 84 per cent. The mean nitrogen efficiency is 56 per cent. The nitrogen surplus at the nitrogen-efficient point is less than half of the observed surplus, whereas production costs increase by only 3 per cent.