Introduction to Efficiency and Productivity Analysis

The second edition of this book has been written for the same audience as the first edition. It is designed to be a "first port of call" for people wishing to study efficiency and productivity analysis. The book provides an accessible introduction to the four principal methods involved: econometric estimation of average response models; index numbers; data envelopment analysis (DEA); and stochastic firontier analysis (SFA). For each method, we provide a detailed introduction to the basic concepts, give some simple numerical examples, discuss some of the more important extensions to the basic methods, and provide references for further reading. In addition, we provide a number of detailed empirical applications using real-world data. The book can be used as a textbook or as a reference text. As a textbook, it probably contains too much material to cover in a single semester, so most instructors will want to design a course around a subset of chapters. For example, Chapter 2 is devoted to a review of production economics and could probably be skipped in a course for graduate economics majors. However, it should prove useful to undergraduate students and those doing a major in another field, such as business management or health studies.