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Title: In search for the most preferred solution in value efficiency analysis
Authors: Ravanos, Panagiotis
Karagiannis, Giannis
Type: Article
Subjects: FRASCATI::Social sciences::Economics and Business
FRASCATI::Social sciences::Economics and Business::Economics
Keywords: Value efficiency analysis
Most preferred solution
DMU frontier position
Most productive scale size
Average production unit
Common weights
Issue Date: 2022
Publisher: Springer
Source: Journal of Productivity Analysis
Volume: 58
Issue: 2-3
First Page: 203
Last Page: 220
Abstract: Choosing the Most Preferred Solution (MPS), namely a real or artificial Decision Making Unit (DMU) reflecting the decision maker’s preferences over the desirable structure of inputs and outputs, is of particular importance in Value Efficiency Analysis (VEA). In this paper, we review various MPS choices used in the VEA literature and propose some new, which rely respectively on the relative position of frontier DMUs, the Most Productive Scale Size (MPSS), the Average Production Unit (APU), and common vectors of weights. The suggested MPS choices reflect overall organizational goals such as the pursuit of scale economies and the maximization of structural efficiency, or the need to assess DMUs against common standards because of limited control over the resources allocated to them or autonomy in setting their own priorities. The potential implications of using different MPSs in VEA are illustrated by providing comparative empirical results using a dataset of 526 Greek cotton farms.
ISSN: 0895-562X
Other Identifiers: 10.1007/s11123-022-00645-0
Appears in Collections:Department of Economics

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