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Efficiency Analysis

MN Margherita Neri
PC Patricia Cubi-Molla
GC Graham Cookson
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The data extracted on the efficiency analysis included the following: the quantitative methods used to measure efficiency; the type of efficiency under analysis; and whether the study included a complementary analysis of the determinants of productivity.

Among the type of efficiency under analysis, technical efficiency, allocative efficiency, cost efficiency, and scale efficiency were distinguished. Technical efficiency is concerned with the extent to which an entity is minimising the use of inputs to produce a certain level of output, or is maximising the output given a certain level of input. Cost or productive efficiency is concerned with the extent to which an entity is producing a certain level of output at the least cost, or is maximising the output given a certain level of cost. Cost efficiency requires that a production entity be technically efficient. Allocative efficiency is concerned with the extent to which an entity is maximising value to society through the combination of outputs it produces, each productively efficient. Scale efficiency is concerned with the extent to which an entity is operating at a production scale that maximises the ratio of outputs to inputs [10].

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