Measuring potential gains from reallocation of resources |
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Authors: | Vladimir Nesterenko Valentin Zelenyuk |
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Affiliation: | 1. UPEG (Ukrainian Productivity and Efficiency Group) at EERC, (National University “Kyiv-Mohyla Academy”), Voloska 10, Office 406, 04070, Kiev, Ukraine 2. Kyiv Economics Institute (KEI), Kiev, Ukraine
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Abstract: | In this work we consider the case when efficient operation of individual economic units does not necessarily imply efficiency for a group of these units. Merging theoretical findings of Li and Ng (Int Adv Econ Res, 1995, 1, 377.) and Färe and Zelenyuk (Eur J Oper Res, 2003, 146, 615), we develop new group-wise efficiency indexes that measure the extent to which the performance of a group of economic units can be enhanced, even if all these units are individually efficient. The existence of such potential improvement is attributed to non-optimal allocation of inputs across the individual economic units from the point of view of a group of these units. |
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