Efficiency Measurement in Nonmarket Systems Through Data Envelopment Analysis

Measurement of total factor productivity in nonmarket systems has attracted some attention in current research. Given the observed values of inputs and outputs for such systems, the problem of measurement arises due to three major reasons. First, the inputs and outputs may not have for the most part any observable market prices; hence the imputation of an equilibrium market model is not directly available. Second, the production set to which the input and output vectors belong is not directly identifiable from the observed data set; also the input-output data may be subject to a stochastic generating mechanism. Third, the units may not be profit oriented, where profit is a scalar measure of performance.

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