On the combined estimation of technical efficiency and its application to agriculture

Abstract

Assessment of effi ciency of businesses has been considered an object of interest by economists since the 1950’s. A number of methods have been developed, including the so-called parametric approaches, using the regression analysis, and the non-parametric approaches, connected with the mathematical programming techniques. However, the diversity of available methods, especially when supplying contradictory estimates, leads to confusion, hindering an objective interpretation of results. In this paper, we propose a procedure leading to the reduction of such discrepancies by the proper modifi cation of a combined method linking the non-parametric approach with a parametric one. Usefulness of the proposed solution is shown by estimation of technical effi ciency concerning the agricultural production in the USA and the selected regions of the European Union.