Unified efficiency evaluation of regional industries in China: a nonradial directional distance function approach

ABSTRACT

This article extends a nonradial directional distance function (DDF) to allow decision-making units to adjust inputs in two directions. Based on this nonradial DDF, we evaluate the regional industrial unified efficiency (operational efficiency and environmental efficiency) in China between 2005 and 2014. We find that East China has the highest industrial unified efficiency score, followed by the West and Central China. To avoid methodological biases, three other models are also applied to assess the unified efficiency. The results indicate that a nonradial DDF under natural and managerial disposability (our model) has a greater discriminating power than a nonradial DDF under either of the disposabilities and the radial DDF.

KEYWORDS:

• Data envelopment analysis
• directional distance function
• unified efficiency
• natural disposability
• managerial disposability

JEL CLASSIFICATION:

• C61
• C67
• Q43
• Q50

Acknowledgment

This study was supported by the Major Program of Humanities and Social Science Key Research Base of Ministry of Education (grant number 13JJD790036), the Outstanding Innovative Talents Cultivation Funded Programs 2014 of Renmin University of China and the Fundamental Research Funds for the Central Universities (grant number 106112016CDJSK01JD05).

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This study was supported by the Major Program of Humanities and Social Science Key Research Base of Ministry of Education [grant number 13JJD790036], Outstanding Innovative Talents Cultivation Funded Programs 2014 of Renmin University of China and the Fundamental Research Funds for the Central Universities [grant number 106112016CDJSK01JD05].