Cost Decompositions and the Efficient Subset

This paper develops two cost decompositions based on the multiplicative Russell and additive slack-based (in)efficiency measurement frameworks. While the multiplicative cost decomposition is a straightforward extension of the standard cost decomposition, the decomposition we develop in this paper incorporates slacks directly so that efficiency is measured relative to the efficient subset. To show the applicability of our novel approach, we provide an illustration using a data set used in the literature.

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