Ranking production units by their impact on structural efficiency

abstract League tables associated with various forms of service activities from schools to hospitals illustrate a public need for ranking institutions by their productive performance. We present a new approach for ranking production units which is based on each unit’s marginal contribution in terms of structural efficiency. The approach is radically different from conventional methods based on super-efficiency indexes in Data Envelopment Analysis. We illustrate the mechanics of our method by numerical examples as well as an empirical illustration. We further demonstrate that our new indexes inherit all relevant and desirable properties of the Farrell efficiency index upon which they are constructed.

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