Measuring cost efficiency of public and academic libraries in Poland - a methodological perspective and empirical experience (Keynote paper)

In the for-profit sector, market competition and self-interested profit maximisation are the forces society relies upon to push decision-makers to operate efficiently (in every sense). Neither of these forces is present to the same extent in the government or not-for-profit sector, so it is unlikely that libraries perfectly minimise cost. The aim of this study is the presentation of the Bayesian stochastic frontier approach, developed within econometrics, as well as its application to measuring cost efficiency of public and academic libraries in Poland. We apply a short-run cost function to panel data from 20 academic libraries (years 1997, 1998, 1999) and to cross-sectional data from 240 public libraries (year 2000). Within the stochastic frontier model framework, we decompose the error term into a symmetric around zero random variable for statistical noise, and a positive random component measuring economic inefficiency. Using Bayesian techniques, the average cost efficiency of public libraries is estimated to be around 92%, the average cost efficiency of academic libraries is estimated to be around 88%.

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