A generalized measure of technical efficiency

Abstract

With the growing interest in the theory of the frontier production function, the central analysis is the measurement of technical efficiency. However, the methodology has not been tested vigorously as has that of the conventional production function. With few exceptions, studies to date have used cross-section data to measure mean technical efficiency of sample firms through the frontier production function. This study uses panel data to measure not only the mean technical efficiency, but also the individual firm-specific technical efficiencies of sample Indian farms relative to the frontier production function. Further, it identifies the factors causing variations in individual technical efficiencies.