Economic interpretations of DEA

Research on productive efficiency at the firm level has developed as an important and active strand of research the last decades, both within operations research, management science and economics. Two apparently different definitions of efficiency are examined, but it is shown that when both estimation methods are based on solving linear programming problems the definitions of efficiency are identical. The purpose of the paper is to give the basic ideas of efficiency analyses using DEA as a tool for researchers not so familiar with efficiency analysis and DEA. The concept of shadow prices is given special attention.     

Why you should use high frequency data to test the impact of exchange rate on trade

This study suggests that testing the impact of exchange rate on trade should be done using high-frequency data. Using different data frequencies for identical periods and specifications between the US and Canada, we show that low-frequency data might suppress and distort the evidence of the impact of exchange rate on trade in the short run and the long run.     

Persistence of Price–Cost Margin and Technical Efficiency in the Indonesian Food and Beverage Industry

Abstract

This research investigates the persistence of price–cost margin (PCM) and technical efficiency (TE) of firms and the relation between these two factors in 44 subsectors of the Indonesian food and beverage industry in the period 1980–2014. Data envelopment analysis with a bootstrapping approach is applied to estimate TE. An autoregressive model, accounting for endogeneity, is applied to estimate the persistence coefficients of PCM and TE. A cross-sectional regression model is also applied to estimate the relation between the persistence of the PCM and the persistence of TE. The results show that for these food and beverage firms, high PCM and low TE persist. Furthermore, the persistence of PCM negatively affects the persistence of TE in the industry.     

环境规制与中国外商直接投资变化——基于DEA多重分解的实证研究

中国经济进入“新常态”,产能过剩和环境污染问题日益突出,国际投资环境不容乐观,“供给侧结构性改革”为中国经济“新常态”下的必要举措。本文探索环境规制下我国FDI变化的影响因素,通过FDI的子向量距离函数定义“环境规制生产技术”和“非环境规制生产技术”,以此构造环境规制的成本效应,测度中国30个省份1999-2015年的环境规制成本,并在此基础上对实际FDI的变化进行分解。本文的主要结论有:2001年后,中国各省份的环境规制成本呈现整体上升趋势,东部地区的环境规制效果最为明显;环境规制下,中国各省份的实际FDI增速先加快后减缓,2015年之前,第二产业对FDI的吸引力最强,2014年开始,第三产业对FDI的吸引显著增强,“供给侧结构性改革”初显成效,促进了我国的产业结构优化升级。反事实检验显示导致各个时期FDI变化的影响因素不尽相同,但随着改革开放的力度不断加大,全要素生产率和产业结构对FDI分布的影响显著增强。     

Application of evidential reasoning approach and OWA operator weights in road safety evaluation considering the best and worst practice frontiers

Data envelopment analysis (DEA) has recently become relatively popular with road safety experts. Therefore, various decision-making units (DMUs), such as EU countries, have been assessed in terms of road safety performance (RSP). However, the DEA has been criticized because it evaluates DMUs based only on the concept of self-assessment, and, therefore does not provide a unique ranking for DMUs. Therefore, cross efficiency method (CEM) was developed to overcome this shortcoming. Peer-evaluations in addition to self-evaluation have made the CEM to be recognized as an effective method for ranking DMUs. The traditional CEM is based only on the standard CCR (Charnes, Cooper and Rhodes) model, and it evaluates DMUs according to their position relative to the best practice frontier while neglecting the worst practice frontier. However, the DMUs can also be assessed based on their position relative to the worst practice frontier. In this regard, the present study aims to provide a double-frontier CEM for assessing RSP by taking into account the best and worst frontiers simultaneously. For this purpose, the cross efficiency and cross anti-efficiency matrices are generated.Even though a weighted average method (WAM) is most frequently used for cross efficiency aggregation, the decision maker's (DM) preference structure may not be reflected. For this reason, the present study mainly focuses on the evidential reasoning approach (ERA), as a nonlinear aggregation method, rather than the linear WAM. Equal weights are often used for cross efficiency aggregation; consequently, the effect of the DM's subjective judgments in obtaining the overall efficiency is ignored. In this respect, the minimax entropy approach (MEA) and the maximum disparity approach (MMDA) are applied for determining the ordered weighted averaging (OWA) operator weights for cross efficiency aggregation. The weighted cross efficiencies and cross anti-efficiencies are then aggregated using the ERA. Finally, the proposed method, called DF-CEM-ERA, is used to evaluate the RSP of EU countries as well as Serbian police departments (PDs).     

Dynamic efficiency evaluation of Italian judicial system using DEA based Malmquist productivity indexes

The aim of this study is the empirical analysis of the Italian judicial system, measuring its efficiency and productivity. For this purpose, in details, the Data Envelopment Analysis (DEA) and Malmquist indexes were used, since they are recognized by the current literature as successful techniques to evaluate the performance of decision making units, namely the courts of law in our field of application.The statistical data on the administration of justice in Italy, as reported in Dossier n. 11 May 2013, Senate Research Services, Research Office on Institutional Issues, Justice and Culture, XVII legislature, shows that the efficiency crisis of justice in Italy began in the 1970s of the last century, aggravating during the ‘80s, and reaching its most critical moment during the 1990s. Several studies emphasize the relevance of the effects of inefficiency upon the judicial system on the credit and financial markets.The present analysis, using data that covers a wide time span and is disaggregated at district level, has set the goal of measuring the efficiency of the individual Italian judicial offices while assessing the progress of productivity in its components, by the means of technological progress and scale efficiency. The efficiency analysis that was carried out transcends the aspect of judicial taxation, considering how the passage of time has impacted on judicial efficiency.Considering the judges and judicial administration employed, in the new, pending and finished cases during the years ranging from 2011 to 2016, the results highlighted a distinct heterogeneity among courts, depending on their geographical location. The five-year period that was considered, included the years in which the judicial geographical distribution reform entered into force, so to better comprehend how this complex reform influenced the recovery of efficiency of the judicial offices. Furthermore, by breaking down the index into change in efficiency and change in technology, this work offers a further glimpse into judiciary organization. The application of combined DEA method and Malmquist indexes for evaluating court efficiency in a large time frame showed very interesting and useful results, relevant for judicial administration.     

The long-run performance of acquiring firms in mergers and acquisitions: Does managerial ability matter?

This paper examines the association between the managerial ability of acquiring firms and their long-term performance after mergers and acquisitions (M&As). Based on M&A data for U.S. firms from 2000 to 2012, we find that acquiring firms with higher managerial ability achieve better long-term operating performance and stock returns. We also find that the positive effect of managerial ability on long-term performance is more pronounced when acquirers and target firms belong to the same industry. The result suggests that managers who have higher ability to manage their firms, i.e., to generate higher revenues for given resources, are more capable of achieving higher synergy benefits and better post-acquisition performance in same-industry acquisitions than in cross-industry acquisitions.     

Analyzing tactical control strategies for aircraft arrivals at an airport using a queuing model

This paper proposes to analyze control strategies for arrival air traffic at an airport using a classical queuing model. The parameters of our model are estimated by means of a data-driven analysis of two years of radar tracks and flight plans for arrival flights at Tokyo International Airport from 2016 to 2017. Our results show that increasing the capacity with one or two more aircraft in the airspace up to 60 NM around the airport significantly mitigates arrival delays, even when assuming future, increased arrival traffic volumes. The outcomes of this study provide insights into the effectiveness of arrival control strategies and are seen as a means to recommend scenarios to be further analyzed with human-in-the-loop simulations.     

Assessing data quality: A managerial call to action

While awareness of data quality has increased in recent years, there have been very few studies on the actual level of data quality within organizations. This article outlines the analysis of 75 data quality assessments collected over the course of 2 years from a wide range of organizations, data sets, and business processes. The results reveal that data is in far worse shape than most managers realize. On average, 47% of recently created data records have at least one critical error. High-quality data is the exception, with only 3% of the DQ scores rated acceptable (≥97%). Indeed, the results suggest an unhealthy organizational tolerance of bad data and underscore the magnitude of improvement organizations need to make in order to be truly effective in the knowledge economy. By providing a unique insight and benchmark for data quality practitioners, this article serves as a call-to-action for all organizations—regardless of size and type—to determine their level of data quality. Finally, we set out a typology that presents a categorical scheme to promote preemptive actions against the most frequent types of data error.