Efficiency Measures Using the Ray-Homothetic Function: A Multiperiod Analysis

Abstract

Recent investigations have provided mixed assessments of farm firm efficiency. This analysis examined the efficiency of a homogeneous sample of central Illinois grain farms over a six-year period. A best-practice frontier was constructed using the ray-homothetic function, which allowed optimal farm output to vary with factor intensity. Efficiency measures were found to increase with temporal aggregation. The ray-homothetic approach was found to attribute high scale inefficiencies to larger sample farms in cases where the factor shares did not vary appreciably across farms. The findings suggest that policy recommendations regarding farm efficiency must be made with care.

Oil pollution and technical efficiency of food crop farmers in the Niger Delta region of Nigeria

“…Data are often available, however on farm output revenue and input expenditures. Therefore, a common approach is to use revenue and expenditure data as proxies for input and output quantities for example, Aly et al (1987), Grabrowski et al (1990) and Neff et al (1991). In traditional agriculture, multiple outputs and inputs are common features and for the purpose of efficiency, analysis output is aggregated into one category and inputs are aggregated into seven categories namely: farm size, fertilizer, labour, capital, land that is, rental value of land, other variable inputs.…”

Efficiency of Manufacturing Establishments in Eritrea

“…Several empirical studies using frontier function methodologies have been undertaken with the purpose of measuring firm efficiency, but with different results. These differences may have been due numerous reasons, including the time period analysed, the degree of sample homogeneity, output aggregation and the method employed (Neff et al, 1991). For example, Bravo-Ureta and Rieger (1990) examine New England and New York farm efficiency using four production frontier methods.…”