TL;DRAbstract
In this chapter we model technology with the input correspondence u → L(u). We assume that x ∈ L(u) and measure production efficiency by calculating where in the input set L(u) the input vector x is located. Thus we take the observed output vector u as given and adopt a resource conservation approach toward efficiency measurement. We refer to this approach as input based, since inputs are the choice variables, and we measure efficiency in terms of maximum feasible shrinkage of an observed input vector, feasibility being determined by the input set L(u).
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In this chapter we model technology with the input correspondence u → L(u). We assume that x ∈ L(u) and measure production efficiency by calculating where in the input set L(u) the input vector x is located. Thus we take the observed output vector u as given and adopt a resource conservation approach toward efficiency measurement. We refer to this approach as input based, since inputs are the choice variables, and we measure efficiency in terms of maximum feasible shrinkage of an observed input vector, feasibility being determined by the input set L(u).
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