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DEA, DFA and SFA: a comparison

Article  in  Journal of Productivity Analysis · July 1996

DOI: 10.1007/BF00157046

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 The Journal of Productivity Analysis, 7, 303-327 (1996)
0 1996 Kluwer Academic Publishers, Boston. Manufactured in the Netherlands.

DEA, DFA and SFA: A Comparison

LENNART HJALMARSSON
Department of Economics, Giiteborg University ksagaton 1, S-411 80 Gijteborg, Sweden
E-mail: Lennart.Hjahnarsson@economics.gu.se
SUBAL C. KUMBHAKAR
Department of Economics, University of Texas at Austin, Aurth, 2X 78712-1172
E-mail: kkar@mundo.eco.utexasedu

ALMAS HESHMATI
Department of Economics, Giiteborg University, Vasagatan I, S-411 80 Giitebov, Sweden
E-mail: Almas.Heshmati@?economics.gu.se

Abstmct
The nonparametric data envelopment analysis (DEA) model has become increasingly popular in the analysis of
productive efficiency, and the rumber of empirical applications is now very large. Recent theoretical and mathematical
research has also contributed to a deeper understanding of the seemingly simple but inherently complex DEA
model. Less effort has, however, been directed toward comparisons between DEA and other competing efficiency
analysis models. This paper undertakes a comparison of the DEA, the deterministic parametric (DFA), and the
stochastic frontier (SFA) models. Efficiency comparisons across models in the above categories arc done based
on 15 Colombian cement plants observed during 19681988.

Keywords. Productive efficiency, data envelopment analysis, deterministic frontiers, stochastic frontiers, panel
data, cement industry

1. Introduction

Since the seminal articles by Farrell (1957) and Aigner and Chu (1968), methodological
development in frontier production function estimation has been rapid. Today there exists
a multitude of approaches, deterministic as well as stochastic, surveys of which can be
found in Love11 (1993), Greene (1993), and Heshmati (1994). DFA, the original deter-
ministic parametric frontier analysis has, to a large extent, been replaced by DEA, the
nonparametric data envelopment analysis model, which has become increasingly popular
in the analysis of productive effkiency in different sectors of the economy. The number
of empirical DEA applications is now very large; see the extensive bibliography by Seiford
(1994) Recent theoretical and mathematical research has also contributed to a deeper
understanding of the seemingly simple but inherently complex DEA model. Parallel with
this, the SFA or stochastic frontier approach, (see Aigner, Lovell, and Schmidt (1977))
and especially its extension to panel data have also developed rapidly in recent years (see
Heshmati (1994) and Cornwell and Schmidt (1995)). Less effort has, however, been directed
toward the comparison of competing efficiency analysis models. This paper compares several
models in the DEA, DFA, and SFA categories, especially with respect to magnitude of
efficiency scores, efficiency ranking of units, and time pattern of efficiency.
304 L. HJALMARSSON, S.C. KUMBHAKAR and A. HESHMATI

A priori, the choice among these models requires different tradeoffs. In the case of DEA
no restrictive assumptions about technology have to be made, except about convexity. DEA
and DFA do not require any distributional assumptions about efficiency and since no
stochastic specification is imposed, all variation between production units is interpreted
as inefficiency. A main attraction of the SFA model is the possibility it offers for a richer
specification, particularly in the case of panel data. It also allows for, among other things,
a formal statistical testing of hypotheses and the construction of confidence intervals.
However, while a statistical stochastic approach may seem most attractive, it also implies
that the frontier has generated all data (see Schmidt (19851986)) and this is not consistent
with embodied technical progress and a putty-clay technology. Therefore, the choice be-
tween different approaches must be based on trade-off? concerning the purpose of the study,
type of data, technology characteristics, etc.
In this paper the goal is to see if it mattes empirically which model you use. Specifically,
we compare several models representing the three dominant frontier approaches-DEA,
DFA, and SFA. The aim is to see whether there are any substantial differences in the effi-
ciency estimates derived from three alternative approaches, in terms not only of produc-
tive efficiency but also returns to scale and technical prograss. In the empirical part, we
use unbalanced panel data from the Colombian cement industry observed over the period
1968-1988.
In general, three different efficiency measures may be derived: input saving, E,; output
increasing, ZY$;and scale efficiency, E3, (the notation refers to Ftirsund and Hjalmarsson
(1974, 1979a, and 1987)). Since & is the standard measure in the case of SFA, in this
study we focus here just on output-increasing efficiency, E;, i.e., technical efficiency de-
fined as the ratio between observed output of a cement plant and the potential output ob-
tained had the plant been on the frontier employing the observed amount of inputs; for
efficiency definitions, see Fdrsund and Hjalmarsson (1974, 1979a).
The main reason for our choice of the cement industry is that it approximates a putty-
clay industry quite well. This should result in a more stable efficiency structure and facilitate
comparisons. The basic technology is embodied in the cement kiln, the design of which
is decided at the investment date.
The paper is organized as follows: Section 2 gives the DEA, DFA, and SFA models;
Section 3 describes the Colombian cement data; Section 4 contains the empirical results,
together with a comparison of the performance of the different models; Section 5 presents
the conclusions of this study.

2. The Models

2.1. Data Envelopment Analysis, DEA

In this approach the efficiency of a micro unit, m, is measured relative to the efficiency
of all the other micro units, subject to the restriction that all micro units (i = 1, . . . , m,
. .) IV) are on or below the frontier.
The output-increasing efficiency measure, I& is achieved by restricting the reference
point on the unknown frontier and using the same amount of input(s) as observed for unit
DEA, DFA, AND SPA: A COMPARISON 305

m. The efficiency scores are obtained by solving the following linear programming (LP)
problem for each unit, i, with (single) output yi, and input Xi, (Xi = Xii, . . . , xi) under
variable returns to scale (VRS), (where Amis a vector containing the nonnegative weights,
Ai,, which determine the reference point):

Max l/E& subject to (1)

4nt

t = 1, . . . T (14

j = 1, . . ., n t = 1, . . . . T (lb)
i

t = 1, . . . . T UC)

&mt 1 O, i= 1, . . ..N t = 1, . . . . T (Id)

where l$,, is the output-increasing efficiency measure for unit m; n the number of inputs;
Nthe number of production units, and T ihe number of time periods.
Restriction (la) implies that the efficiency-corrected volume of output (l/E&Y, must
be less than or equal to the amount of output produced by the reference unit. Restriction
(lb) states that the amount of input used by unit m must at lest equal the amount of input
used by the reference unit. Restriction (Ic) is the condition for variable returns to scale,
VRS. If this last restriction is omitted, constant returns to scale, CRS, is implied. E, and
Q then coincide, and both coincide with scale efficiency, E,, in the case of VRS.‘.
Since scale inefficiency is due to either decreasing or increasing returns to scale, one
can easily determine the case by inspecting the sum of weights, S,

S = 5 Xi,t (2)
i

for the E, calculations with CRS technology. If this sum is less than one we have decreas-
ing returns to scale, and if it is larger than one we have increasing returns to scale.
When efficiency is measured along a ray from the origin, a micro unit may appear f?ully
efficient, even if it is not fully efficient in the sense that it is dominated by another unit
(regardless of assumptions about scale property). In empirical applications this can be con-
trolled for by an inspection of the slack variables.
306 L. HJALMARSSON, S.C. KUMBHAKAR and A. HESHMATI

2.2. Deterministic Pammetric Frontier, DFA

Since we will apply a translog production function in the case of SFA, translog would have
been a natural choice for DFA as well, except that this function yielded a degenerate LP
solution. Therefore, we have chosen a somewhat less flexible, homothetic function, which
allows for variable returns to scale, with a Cobb-Douglas kernel function. This specifica-
tion was originally introduced by Zellner and Revankar (1969). The main reason for the
choice of this homothetic function is that it, except for the Cobb-Douglas, seems to be
the one most applied in empirical DFA studies. The deterministic frontier production func-
tion generating the data are assumed to be of the following general homothetic form:

G(Y) = g(X>ew(-4, U10 (3)

where Y is the rate of output; X a vector of inputs, G(s) a monotonically increasing timc-
tion; g(s) a linearly homogeneous function; and u is the efficiency variable.
Technical change is accounted for by a simple time trend. The function is specified as:

n
Yaepy = A@’ n Xj?. (4)
j=l

This specification is, in logarithmic form, linear in parameters. The elasticity of scale fimc-
tion is:

1
E(Y) = ____ (54
a! + PY

Solving for Y with E = 1 gives the optimal scale as:

The idea underlying the deterministic parametric function is that the parameters of the
chosen function are such that the frontier of the estimated function lies on or above the
observations. The frontier function specification above is derived by solving the following
LP problem (see Forsund and Hjahnarsson (1979b, 1987)):

1nA + 6t + ~Oj4i(t)
j=l
- a In x(t) - OK(t)
1 (6)

subject to T X N constraints securing the observed units to be on or below the frontier:

In A + 6t + $J ajXji(t) - CYIn q(t) - /3x(t) 2 0

j=l

i = 1, . . . . N t = 1, . . . . T (7)
DEA, DFA, AND SFA: A COMPARISON 307

In addition, we have the homogeneity constraint

gUj=l 69
j=I

and

Q!, /3, Uj 1 0 (9)

Constraint (7) is the on or below frontier constraint, while (8) is the linear homogeneity
constraint of the kernel function and (9) ensures that the kernel elasticities and the scale
parameters are nonnegative.
Output-increasing efficiency is obtained as the ratio between observed output, Y”, and
frontier output, Y*, using the observed amount of inputs in the frontier function (4), i.e.,
the frontier output is obtained as the solution to

y**$" = AeB* fi Xj"' (44

j=I

where X0 is the observed input vector.

2.3. Stochastic Frontier Analysis, SFA

Here we consider three categories of the SFA. The first is a regular panel data model with
time-varying technical inefficiency, suggested by Battese and Coelli (1992), labeled Model
1 (SFA1); see Kumbhakar, Heshmati, and Hjalmarsson (1994). The second, Model 2 (SFA2),
is an extension of SFAl that introduces some plant and production characteristic variables.
The idea is to use these variables as controls instead of regular inputs. Finally, in Model
3 (SFA3) technial efficiency is explained by variables other than the regular inputs; see
Reifschneider and Stevenson ( 199 1).

Model 1 (SFAl)

The stochastic production frontier model is specified as

yi* = fC&; P> + Eit (10)

where Yi, is the output of fum i(i = 1, 2, . . , N) at time t(f = 2, . . . , TJ; f(*) is the
production technology; X is a vector of n inputs; and 0 is the vector of unknown parameters
to be estimated. Because of unbalancedness firms are observed different number of years.
The error term, cir is specified as*

Eif = Vif - Uif (11)

308 L. HJALMARSSON.SC. KUMBHAKAR and A. HESHMATI

where vir is statistical noise (assumed to be independently and identically distributed); uit
1 0 represents technical inefficiency, and vit represents those effects which cannot be con-
trolled by the firms, such as quality, access to raw material, labor market conflicts, trade
issues, measurement errors in the dependent variable, and left-out explanatory variables.
Technical inefficiency represents factors that can be controlled by the firm.
The production technology is represented by a translog fimction, viz.,

Yir = BO + cjPjxjcj,, + Ptt + 1/2{CjCkPjkXjitXkit + Pttt2) + cjPjrxjitt + Eit (12)

whereyandxj(j = 1, . . ., n) are the respective output and inputs measured in logarithms.

The estimates of returns to scale, RTS, i.e., the elasticity of scale, E, are calculated from
the sum of the input elasticies as

RTS = E(X) = CEj = Cj aY/‘/aXj = Cj(@j + CkPjkXk + pjf t), (13)

The time trend, t, captures exogenous technical change, which can be viewed as a shift
in the production frontier over time. Technical change (ET) is calculated from

ET = ay/dt = & + &t f CjPj*Xj- (14)

In this model technical efficiency is specified as (see Battese and Coelli (1992) and Kum-
bhakar (1990)):

uif = exp[--r](t - z)]Ui 3 ?JitUi (15)

where n is a single unknown parameter and Ui is assumed to be normally distributed ZV(p,

g’,) truncated at zero from below. The noise component, Vim,is assumed to be i.i.d. N(O,
4.
The above specification allows technical inefficiency to change over time in a particular
way. Technical inefficiency either increases (r] > 0), or decreases (n < 0) or remains con-
stant (7 = 0) over time. Thus, the temporal pattern is not only the same for all firms but
it either increases or decreases exponentially.
Given the distributional assumptions on Uir and vi,, the parameters of the above model
can be estimated using the ML method; see Battese and Coelli (1992) for details. Once
the parameters are estimated, technical efficiency can be estimated from the mean or mode
Of(Ui IC511, . . .) Ein)-
If one is interested in the confidence interval of TE, it can be calculated as below in
the manner set forth by Horrace and Schmidt (1996). In the calculation the (1 - cu>lOO%
confidence interval of TE is given by

exP(%t(-ui - 2~~~)) 5 TEit I exp(n,,( -ui - Zf 0;)) (16)

where
v
Oi = (at u2)/(U2v + BfIli U2,) (17)
DEA, DFA, AND SFA: A COMPARISON 309

and

where ZL and Z” are the lower and upper limits of the (1 a) 100 % confidence interval
of a standard normal variable, Z. That is,

P[Zi > Z,“lZi > - /A; a;] = (1 - (Y/2) (184

and

P[Zi > Z,“lZi > -/JdrUi*] = ((w/2). (18b)

where

Pccf= (P d - qf Ei U’,)/(U’, + qfr]jU$ (1%

ThLlS,

zi” = a-‘(1 - (1 - a/2)( 1 - a( - p’h;))) (204

and

Zi’ = 9-‘(1 - (a/2)(1 - ~(- ~1/~r))). Cob)

Model 2 (SFA2)

This is an extension of the above, but with the inclusion of some firm and production
characteristics, z, as control variables in the production function (12). The z variables in-
clude types of production process (wet, dry, both), fuel type (coal, gas, oil, and coal),
regions, locations, etc. Technical inefficiency u is assumed to be independent of these z
variables. The estimation of parameters and the prediction of technical efficiency proceed
as with SFAl.

Model 3 (SFA3)

In this model we use the z variables as determinatns of technical efficiency, as in

Reifschneider and Stevenson (1991), Kimbhakar, Ghosh and McGuckin (199 1) and Battese
and Coelli (1995). The model is specified as

Uir = C,$6sZ,Ti, + Wit. Uif 1 0. (21)

Following Battese and Coelli (1995) we assume Wit - i.i.d. N(0, ai) truncated at
-C,6,,q,, from below, or equivalently, uil - N(C,G,z.~i,, a2,>truncated at zero from below.
In the above specification, the z variables are treated as determinants of technical inefficiency.
Two special cases of the model are in order. First, C,~,Z,~, = 60 implies that Uir is the trun-
cated normal distribution considered by Stevenson (1980), and, second, C,S,.zY, = 0 gives
310 L. HJALMARSSON, SC. IWMBHAKAR and A. HESHMATI

the original Aigner, Lovell, and Schmidt (1977) formulation. The parameters of this model
can be estimated by the ML method. The likelihood function and estimation issues are
discussed in Battese and Coelli (1995). It can be shown that (uil 1Eit) - N(&, 0;) trun-
cated at zero from below, where

Pi”, = {C” Z cs 6s &it - O”, %YCa2, + u2,>> (224

and

CT”0= {u;u;/(u; -t CT;>>. (22b)

Thus, technical inefficiency can be prediced from the mean, that is,

;it = E(uif IeiJ = df + uO{db~~“O>~(l - W&“O>>l- (23)

An alternative method to predict technical efficiency is to use

TE,, = E[exp( -u~~I+)] = {exp(-& + 1/2~$} (~[(~~~/u~)-u~]/~(~~/u~)} .(24)

A (1 - cu)lOO% confidence interval for TE can be expressed as

exp( - & - ~0 Zi’;3 I TEi* 4 exp( - & - uo Zi) (25)

where

z; = F’(l - (1 - (r/2)(1 (264

and

3. The Data

The data used in this study cover the entire Colombian cement industry. The industry con-
sists of 16 plants, each with one or more kilns. One plant entered the market late in 1986,
and was observed for only three years. This plant was considered an outlier and excluded
horn the sample. The final data consist of an unbalanced panel of 15 plants observed over
the period 1968 to 1988. The plants are owned by 13 private Colombian companies. In
four cases, there are some limited foreign ownerships and in three cases, there is limited
state ownership.
The cement industry produces a homogeneous output. The wet process is the most com-
mon process in the Colombian cement industry. This process has, in general, higher energy
input coefficients than the dry process, and in many countries has gradually been replaced
by the dry process. In some cases, however, the character of the limestone makes it im-
possible to use the dry process.
DEA, DFA, AND SFA: A COMPARISON 311

The data include the actual production figures and maximum capacity of the cement
plants, as well as the input variables, namely, labor, energy, and capital. With the excep-
tion of the capital variable, the data have been obtained from the Instituto Colombiano
de Productores de Cement0 (ICPC), a central organization providing information and
technical assistance to the Colombian cement industry. Summary statistics of the data are
presented in Table 1. More details on the data are found in Salas (1994).
The capacity (C) of a plant is measured in tonnes per year and is defined as the technical
maximum capacity available for production. Output (I’) is defined as the observed produc-
tion of cement per year. It is measured in tonnes. Capacity utilization (CU) is defined as
the ratio of observed output to the capacity of the plants. In addition to the capacity utiliza-
tion, we have information on the production process and energy use characteristics.
The energy variable (E) is measured in calories and is an aggregate of the plant level
consumption of energy. The types of fuel used in the production process are coal (75 %),
natural gas (24%), and oil (1%). Electricity is also used, especially for the mills. About
30% of the total Colombian coal used in industry is used in the production of cement.
The labor variable (L) includes both blue- and white-collar workers. It is expressed in
working hours per year.
The capital variable (K) is obtained from the balance sheets of the different plants and
covers machinery and equipment. It is measured in constant 1978 pesos.
The raw material, limestone, is proportional to output and is, therefore, not included
in the analysis.
A number of plant and production characteristic variables (z) are used as control variables
in the estimation and explanation of technical efficiency. These variables are: the type of
production process, the fuel type, regional location, closeness to urban areas, capacity utiliza-
tion, number of kilns, and a time trend. The variable production process is a dummy variable
defined as wet, dry, or a combination of the two process types. The fuel type is a dummy
variable showing the plants main energy use defined as gas, coal, or a combination of coal
and oil. The regional location is a dummy variable indicating whether the plant is located

Bble 1. Summaty statistics of the Colombian Cement plants, 1968-1988.8

Mean Standard Deviation Minimum Maximum

Capacity (C) 361,713 255,130 40,000 1,OuO,OOo

output (Y) 301,953 216,829 22,394 908,100
Labor (I,) 974,660 628,433 60,000 2,611,200
Energy (E) 479,196 383,829 30,794 1,875,446
capi-l m 278,535 331,997 20,553 2,193,745
Capacity utilization (CU) 83 17 35 168
Number of years observed (T) 20 3 7 21
Number of kilns 3.28 1.62 1 7

The total number of observations is 286. Other explanatory dummy variables not included in the table are: The
type of production process (1. wet, 2. dry, and 3. wet + dry), fuel type (1. gas, 2. coal, and 3. coal + oil),
regional location (1. coast, 2. central and northeast) and closedness to the urban areas (1. urban, 2. rural).
312 L. HJALMARSSON, SC. KUMBHAKAR and A. HESHMATI

close to the coast or to central and northeast areas. The proximity to the urban areas is
a dummy variable indicating whether the plant is located in the urban or rural areas. Capacity
utilization, number of kilns and time trend are defined as above.

4. Empirical Results

To save space, we will not report most individual plant efficiency scores; only the pre-
ferred models are presented in Appendix, Table A1-A3.3 We concentrate on the develop-
ment of mean efficiency levels over time and plants, but we are also interested in efficiency
differences for individual plants across models. The annual mean values across models
are presented in Table 4, but are also illustrated in the figures below.

4.1. Data EhvelopmentAnalysis, DEA

In an appraisal of DEA it is not obvious how to handle panel data in order to get models
comparable with the parametric models, and there is no natural way to introduce technical
change. Here we will follow Nkens and vanden Eeckaut (1995) and investigate two op-
tions. The first is to compute a sequential frontier, i.e., efficiency is computed each year
on the basis of all observations generated up to that year, i.e., the first year consists of
the 1968 cross section, while the last year the data set covers all observations 1968-1988.
This case is called DEAS and is the most natural option with many years in the sample.
Because of the small number of observations each year we have not included the z variables
here. The second alternative, but less satisfactory case when T is large, DEAI, is an in-
tertemporal frontier. Here we merge the data for all years into one set and calculate effi-
ciency scores for the entire data set. In both casesconstant returns to scale, CR& and variable
returns to scale, VRS, are investigated. The mean efficiency values are presented in Figure
1, where S and Z denote sequential and intertemporal respectively; C and V stand for CRS
and VRS respectively.
In general there is a close correlation between the CRS and VRS results with, of course,
VRS efficiency scores at a higher level than the corresponding CRS scores. While the se-
quential frontier scores are slightly decreasing, the intertemporal frontier scores have a
U-shaped form, which indicates a relatively more rapid rate of technical change during
the first part of the period, compared to the last part of the period. While several firms
are lagging behind the frontier during the first years, most manage to catch up with the
frontier development during the last years.

4.2. Deterministic Parametric Frontier, DFA

The parameter values are presented in Table 2.

In the parametric frontier case, DFA, there is a constant optimal scale level of about
330,000 tonnes, slightly above the mean output level of about 302,000 tonnes but below
the mean capacity level of about 360,000. Technical progress is 2.1% per year as an average
DEA, DFA, AND SFA: A COhfPARlSON 313

2 0.6 --
5 0.5 ~-
i 0.4 ~- /%iisCl
0.3 -- i-m-DEAIC ’
0.2 -- / -+DEAW

0.1 -~ ~.+-DEAN -’

Year

Figure 1. Mean efficiency scores-DEA models.

Table 2. Parameter estimates of the deterministic parametric frontier timction.

InA Trend A aL aE aK a P Optimal Scale

-2.157 0.021 0.046 0.699 0.255 0.825 0.00000053 329811

trend for the entire time period. The values of the marginal elasticities are reasonable with
a farily high energy elasticity of 0.70, a low labor elasticity of 0.05, and a capital eIasticity
in between of 0.25.
The mean values of the corresponding output-increasing efficiency measure are illustrated
in Figures 2 and 3 in different combination with other models. Since scale elasticity varies,
the corresponding DEA model is DEASV, i.e., the sequential DEA model with variable
returns to scale. Except for a level difference, the similarities between the two models are
striking. This is also confirmed by a high correlation; see Table 6.

4.3. Stochastic Frontier Models

The parameter estimates are reported in Table 3.4

Although several parameters of the translog models are statistically insignificant, simpler
functional forms, such as Cobb-Douglas, are rejected by the likelihood ratio (LR) test at
the 5% level of significance. In the first two models, SFAl and SFA2, we failed to reject
the half-normality assumption on technical inefficiency. That is, the hypothesis that p =
0 could not be rejected in the first two models. Both y and o* (which are reparameter-
tied versions of g’, and a$, i.e., a2 = G’, + 4 and y = ~:/a*) are found to be statistically
314 L. HJALMARSSON, S.C. KUMBHAKAR and A. HESHMATI

2 0.6 -,
‘ijf 0.5 -.
E 0.4 -.
0.3
0.2 -.
‘+SFA3.
0.z - __

Year

Figure 2. Mean efficiency scores-SFA models and DFA model.

2 0.6
.g 0.5 --
5 0.4 -- -+- DEASV’
0.3 -~
0.2 --
0.1 -~

Year

Figure 3. Mean efficiency scores-DEA, DFA and SFA models.

significant at the 5 % level of significance. Comparing SFAl and SFA2 we find that SFAl
(which is a special case of SFA2) is rejected by the LR test.
DEA, DFA, AND SFA: A COMPARISON 315

Bble 3. Maximumlikelihoodparameterestimates.Stochasticfrontier models.

Model SFAl SFA2 SFA3

Parameter Estimate Standard Error Estimate StandardError Estimate Standard Error

-19.5287* 5.5564 -21.8094* 5.3022 -13.7057* 3.0810

1.2430* 0.7479 -0.4785 0.6112 1.17%* 0.4457
2.7876* 0.87% 4.4790* 0.7343 0.7949* 0.3856
0.1139 0.3430 0.4350* 0.3268 1.1126* 0.2852
0.0380 0.0808 0.0981* 0.0504 0.0673” 0.0353
-0.0158 0.0493 0.0431 0.0345 -0.0181 0.0262
-0.0977* 0.0489 -0.0753* 0.0446 -0.0455 0.0359
-0.0070 0.0145 -0.0165” 0.0123 -0.0121 0.0136
o.ocO4 0.0004 0.0015* 0.0003 O.OOOS* 0.0003
-0.0171 0.0952 -0.0811 0.0839 0.0425 0.0641
-0.0488* 0.0354 0.0407 0.0339 -0.0904* 0.0338
-0.0041 0.0056 0.0002 0.0051 -0.0124* 0.0036
0.0580* 0.0332 -0.0469* 0.0335 0.0412* 0.0297
-0.0014 0.0041 -0.0152* 0.0052 0.0048 0.0040
0.0042* 0.0030 0.0076* 0.0026 0.0041* 0.0026
0.7997* 0.1969
0.2255* 0.0634 0.4460* 0.1308
0.4353* 0.0725 0.0293 0.1392
-0.7289* 0.1324 -0.2730 0.2341
-0.7673* 0.1260 -0.0797 0.2221
0.0446 0.0479 0.1814* 0.0722
0.0824 0.0489 0.2399* 0.0732
-0.0169* 0.0012
-0.1992* 0.0710
0.0275* 0.0046
0.1399* 0.0682 0.3116* 0.1299 0.0357” 0.0050
0.8563* 0.0722 0.9466* 0.0235 0.7279* o.c-449
-0.0252 0.0374 -0.1223* 0.0174
129.6905 156.1836 186.2835

Since the coefficients of the translog production functions do not have any direct inter-
pretation, we calculate the elasticity of scale and the rate of technical progress. In Table
4 we report values for first and last year, a few intermediate years, the mean of the elas-
ticity of scale and the rate of technical progress for the entire period.
Elasticity of scale in SFAl is found to be always less than unity, whereas in SFA2 it declines
steadily, going from increasing returns to decreasing returns to scale. In SFA3 the prevalence
of constant returns to scale is indicated. The inclusion of z variables in SFA3 to explain
technical inefficiency alters the capital input elasticity resulting in a higher elasticity of scale.
316 L. HJALMARSSON, S.C. KUMBHAKAR and A. HESHMATI

%ble 4. Input elasticities, returns to scale, and technical change by year.

Model SFAl SFA2 SFA3

Year RTS Tech Change la-s Tech Change R-IS Tech Change

1968 0.93 0.017 1.16 0.007 I .oo 0.009

1975 0.90 0.022 1.05 0.027 0.98 0.022
1980 0.87 0.025 0.95 0.038 1.00 0.029
1985 0.88 0.030 0.86 0.051 1.05 0.039
1988 0.99 0.033 0.82 0.062 1.05 0.045
Mean 0.89 0.024 0.98 0.033 1.00 0.027

Technical change is positive and increases over time at a steady rate and, on the average,
at a somewhat higher rate than in the DFA model. The pure component of technical change
is positive in all three models and is larger than the nonneutral component which is negative.
Compared to SFAl, SFA2 shows a much higher rate of technical progress with SFA3 in
between. The main difference between SFAI; and SFAl is that no z variables are used in SFA1.
In all three models mean efficiency is declining over time; see Figure 2.
The r] parameter associated with time-varying technical inefficiency in SFAl and SFA2
is found to be insignificant in SFAl. The value of q is also found to be small in absolute
value. Thus, a weaker trend in declining technical efficiency is found in SFAl. In SFA2,
77is statistically significant and much higher in absolute value. All the z variables, except
for the regional dummy (coast), are found to be statistically significant.
The main attraction of SFA3 is that it is a generalization of SFAl in explaining technical
efficiency. These variables include types of production process, fuel types, regional dum-
mies, locations, capacity utilization, number of kilns, and time trend.5 Plants using either
dry or only wet production process are found to be more inefficient relative to those using
wet and dry processes. In a comparison of wet and dry processes the estimates indicate
the dry process is more efficient. Similarly, plants using either gas or coal are found to
be more efficient than those using both coal and oil. However, the parameters associated
with these variables (gas and coal) are statistically insignificant. So far as regional dum-
mies are concerned we find that plants located in the coastal areas are more inefficient
(less efficient) than those located in the central and northeast regions. Similarly, plants
in the urban areas are found to be more inefficient. Capacity utilization is, as expected,
observed to be positively related to technical efficiency. That is, technical inefficiency is
found to be lower for the plants which are utilizing more of their capacity. The number
of kilns is also found to be positively related to technical efficiency. Finally, technical effi-
ciency is found to decrease over time at the rate of 2.75 % per annum. Technical efficiency
in this model is measured net of technical progress or regress.

4.4. A Comparison of Different Approaches

The annual mean values across models are reported in Table 5. Correlation coefficients
are reported (above the diagonal) in Table 7.
DEA, DFA, AND SFA: A CCXGPARISON 317

Able 5. Mean efficiency values by year.

YW DEASC DEAIC DEASV DEAIV DFA SFAl WA.2 SF43

1968 0.89 0.88 0.97 0.97 0.78 0.84 0.97 0.93

1969 0.89 0.81 0.96 0.90 0.75 0.83 0.96 0.93
1970 0.89 0.81 0.96 0.87 0.76 0.83 0.95 0.93
1971 0.88 0.75 0.95 0.84 0.75 0.83 0.95 0.94
1972 0.88 0.73 0.94 0.80 0.73 0.82 0.94 0.93
1973 0.88 0.75 0.95 0.81 0.75 0.82 0.93 0.94
1974 0.88 0.76 0.93 0.83 0.77 0.82 0.93 0.94
1975 0.88 0.68 0.88 0.75 0.70 0.81 0.92 0.90
1976 0.88 0.73 0.92 0.79 0.76 0.81 0.91 0.93
1977 0.88 0.70 0.90 0.76 0.73 0.80 0.89 0.92
1978 0.89 0.72 0.91 0.79 0.73 0.79 0.88 0.90
1979 0.89 0.76 0.93 0.81 0.75 0.78 0.87 0.92
1980 0.89 0.78 0.91 0.82 0.76 0.78 0.85 0.91
1981 0.88 0.78 0.90 0.81 0.74 0.77 0.84 0.90
1982 0.86 0.78 0.88 0.82 0.73 0.78 0.83 0.87
1983 0.84 0.73 0.86 0.77 0.69 0.78 0.81 0.83
1984 0.84 0.76 0.86 0.79 0.68 0.77 0.79 0.81
1985 0.84 0.82 0.89 0.86 0.70 0.77 0.78 0.84
1986 0.84 0.82 0.90 0.86 0.73 0.77 0.76 0.80
1987 0.84 0.S.S 0.90 0.88 0.74 0.76 0.74 0.81
1988 0.85 0.86 0.89 0.89 0.74 0.76 0.71 0.80
Meall 0.87 0.77 0.91 0.83 0.74 0.80 0.87 0.89

All models here generate a decreasing trend in mean efficiency scores, although the
levels and rates of decrease vary substantially between models. The strongest correlation
is obtained between the two intertemporal DEA models, between the three related SFA
models, between DFA and DEASV and between DEASC and SFA2 and SFA3. In the latter
cae the SFA models are close to CRS, while DFA and DEASV are variable returns to scale
models. On the other hand the correlation between the intertemporal DEA models and
other models is much lower (DFA) or even negative (DEAI and SFA models). Inclusion
of z variables as control variables or to explain inefficiency reduces in general the degree
of inefficiency measured. In Figure 3 we present the closely correlated models, DEASV,
DFA and SFA3. The high degree of correlation is clearly illustrated.
We now turn to technical efficiency measures by plant; see Tables 6 and 7.
The general impression here is of a fairly high rank correlation between different models,
and there are no negative values. This holds in particular for DEASV/DFA (0.77) and
DFA/SFA3 (074), but not for DEASVBFA3 (0.51). It is SFAl which shows the highest
correlation with all DEA modeIs. Looking at a selection ofplants (see also Tables Al-A3),
plant 9 is ranked highest by the deterministic models but, although still fairly high, not
318 L. H&kLMARSSON, SC. KUMBHAKAR and A. HESHMATI

Bble 6 Mean plant efficiency.

Plant DEASC DEAIC DEASV DEAIV DFA SFAl SFA2 SFA3

1 0.95 0.92 0.97 0.94 0.73 0.89 0.89 0.86

2 0.76 0.79 0.85 0.80 0.55 0.60 0.74 0.60
3 0.88 0.73 0.88 0.75 0.68 0.78 0.68 0.87
4 0.93 0.87 0.94 0.87 0.79 0.90 0.97 0.96
5 0.84 0.75 0.86 0.78 0.76 0.74 0.77 0.89
6 0.85 0.71 0.86 0.75 0.72 0.68 0.83 0.88
7 0.89 0.88 0.94 0.91 0.78 0.98 0.96 0.91
8 0.89 0.81 0.90 0.83 0.71 0.80 0.92 0.86
9 1 1 1 1 0.95 0.96 0.95 0.93
10 0.85 0.80 0.90 0.83 0.67 0.91 0.98 0.94
11 0.88 0.74 0.91 0.79 0.81 0.74 0.78 0.97
12 0.87 0.74 0.88 0.76 0.65 0.79 0.97 0.86
13 0.92 0.76 0.95 0.82 0.81 0.73 0.94 0.94
14 0.81 0.63 0.96 0.90 0.82 0.76 0.77 0.92
15 0.76 0.61 0.90 0.78 0.68 0.67 0.77 0.82
MlXill 0.87 0.77 0.91 0.83 0.74 0.79 0.86 0.89

Able % Rank correlation coefficients between models. Mean values each year above the diagonal, mean values
for each plan below the diagonal.

DEASC DEAIC DEASV DEAIV DFA SFAl SFA2 SFA3

DEASC 1 0.52 0.71 0.23 0.8 0.75 0.75 0.74

DEAIC 0.78 1 -0.01 0.93 0.52 0.18 -0.01 -0.08
DEASV 0.68 0.52 1 -0.27 0.65 0.69 0.83 0.92
DEAN 0.59 0.71 0.88 1 0.35 -0.17 -0.34 -0.37
DFA 0.67 0.37 0.77 0.63 1 0.5 0.48 0.61
SFAl 0.73 0.73 0.65 0.71 0.51 1 0.95 0.82
SFA2 0.58 0.58 0.46 0.45 0.29 0.69 1 0.93
SFA3 0.58 0.13 0.51 0.25 0.74 0.57 0.42 1

by SFA3; 2 is rat&cd lowest by all three models. Plant 1 gets a high ranking by all DEA
models but not by the other models. Plants 10 and 15 get a high ranking by DEASV and
SFA3 but not by DFA. For the last three years, however, the differences between DFA and
SFA for plant 15 are small. All three models yields the lowest efficiency score for plant
15 in 1984. For the three SFA models the differences in mean effkiency is striking for
plants 3, 6, 11, and 13. The positions of plants 1, 4, and 9 are found to be more or less
the same.
Confidence intervals of technical efficiency are calculated for the SFA models using the
formulas given in the text (equation numbers (2Oa), (2Ob), (26a), and (26b); see Table 8.
DEA, DFA, AND SFA: A COMPARISON 319

Table 8 Confidence intervals for different models by plant and year.=

Model 1 Model 2 Mode1 3

Idnr/ NT/
Year Nid Low1 Tefl Uppl Ran1 Low2 Tef2 Upp2 Ran2 Low3 Tef3 Upp3 Ran3

1 21 0.83 0.89 0.94 0.11 0.86 0.89 0.93 0.08 0.76 0.86 0.94 0.18
2 11 0.55 0.60 0.65 0.10 0.70 0.75 0.80 0.10 0.50 0.60 0.70 0.20
3 20 0.73 0.78 0.83 0.09 0.66 0.68 0.71 0.05 0.78 0.87 0.93 0.15
4 21 0.85 0.90 0.96 0.11 0.93 0.97 1.00 0.07 0.89 0.96 1.00 0.11
5 21 0.70 0.74 0.79 0.09 0.74 0.77 0.80 0.06 0.78 0.89 0.97 0.19
6 21 0.64 0.68 0.72 0.08 0.80 0.83 0.87 0.07 0.77 0.88 0.96 0.19
7 21 0.94 0.98 1.00 0.06 0.92 0.96 1.00 0.07 0.81 0.91 0.98 0.17
8 21 0.76 0.80 0.85 0.10 0.88 0.92 0.96 0.08 0.75 0.86 0.95 0.20
9 7 0.90 0.97 1.00 0.10 0.88 0.95 1.00 0.12 0.82 0.93 1.00 0.17
10 21 0.86 0.91 0.97 0.11 0.95 0.98 1.00 0.05 0.85 0.94 1.00 0.14
11 17 0.69 0.74 0.79 0.10 0.74 0.78 0.82 0.08 0.90 0.97 1.00 0.10
12 21 0.75 0.80 0.84 0.09 0.94 0.97 1.00 0.06 0.75 0.86 0.96 0.21
13 21 0.69 0.73 0.78 0.09 0.90 0.94 0.98 0.08 0.84 0.94 1.00 0.15
14 21 0.71 0.76 0.80 0.09 0.73 0.76 0.79 0.06 0.82 0.92 0.98 0.16
15 21 0.63 0.67 0.71 0.08 0.74 0.77 0.80 0.06 0.71 0.82 0.91 0.20

1968 12 0.80 0.84 0.88 0.07 0.96 0.97 0.98 0.02 0.84 0.93 0.98 0.15
1969 13 0.80 0.84 0.87 0.08 0.95 0.96 0.97 0.02 0.83 0.93 0.99 0.15
1970 13 0.79 0.83 0.87 0.08 0.94 0.95 0.96 0.02 0.84 0.93 0.99 0.14
1971 13 0.79 0.83 0.87 0.08 0.93 0.95 0.96 0.03 0.85 0.94 0.99 0.14
1972 13 0.78 0.82 0.86 0.08 0.92 0.94 0.95 0.03 0.84 0.93 0.98 0.14
1973 13 0.78 0.82 0.86 0.08 0.92 0.93 0.95 0.03 0.85 0.94 0.99 0.14
1974 13 0.77 0.82 0.86 0.08 0.91 0.92 0.94 0.04 0.85 0.94 0.99 0.14
1975 13 0.77 0.81 0.85 0.09 0.89 0.92 0.94 0.04 0.79 0.90 0.98 0.18
1976 13 0.76 0.81 0.85 0.09 0.88 0.91 0.93 0.05 0.84 0.93 0.99 0.15
1977 13 0.76 0.80 0.85 0.09 0.87 0.89 0.92 0.05 0.82 0.92 0.99 0.17
1978 14 0.74 0.79 0.83 0.09 0.85 0.88 0.91 0.06 0.81 0.90 0.97 0.15
1979 14 0.74 0.78 0.83 0.09 0.83 0.87 0.90 0.06 0.82 0.91 0.97 0.15
1980 14 0.73 0.78 0.83 0.09 0.81 0.85 0.89 0.07 0.81 0.91 0.97 0.16
1981 14 0.72 0.77 0.82 0.10 0.79 0.83 0.87 0.08 0.80 0.90 0.98 0.18
1982 15 0.73 0.78 0.83 0.10 0.78 0.83 0.87 0.09 0.76 0.87 0.95 0.19
1983 15 0.73 0.78 0.83 0.10 0.76 0.81 0.85 0.10 0.72 0.83 0.93 0.20
1984 15 0.72 0.77 0.82 0.10 0.73 0.79 0.84 0.11 0.70 0.81 0.89 0.19
1985 14 0.72 0.77 0.82 0.10 0.72 0.78 0.84 0.11 0.73 0.84 0.93 0.20
1986 14 0.71 0.77 0.82 0.10 0.70 0.76 0.82 0.12 0.70 0.80 0.89 0.19
1987 14 0.71 0.76 0.82 0.11 0.67 0.74 0.80 0.14 0.70 0.81 0.90 0.19
1988 14 0.70 0.76 0.81 0.11 0.64 0.71 0.78 0.15 0.70 0.80 0.89 0.20

Overall
mean 0.75 0.79 0.84 0.09 0.83 0.86 0.90 0.07 0.79 0.89 0.96 0.17

“Low (lower), Upp (upper), Tef (mean efficiency), Ran (range), NT (number of years), Nid (number of plants).

These intervals are found to vary widely from firm to firm. The difference between the
lower and upper efficiency intervals (i.e., the width of efficiency intervals) is within 6 %
to 11% limit in SFAI and within 5 % to 12% in SFAZ. The difference in SFA3 is somewhat
higher (10% to 21 X). In general confidence intervals are not too wide. In all three models
320 L. HJALMARSSON, SC. KUMBHAKAR and A. HESHMATI

we fmd trends in the size of the width of confidence intervals of technical efficiency. The
range increases from 7 % to 11% in SFAl and from 2 % to 15 % in SFA2. The efficiency
interval is much tighter in SFA2. A large percentage (45 %) of firms are within 2% to 7%
limit. In SFA3 we find the efficiency intervals to be very wide. A large percent (23%)
of firms are within the 100% efficiency range. One reason for this wide interval is that
in SFA3 some additional variables are introduced to explain technical efficiency. These
additional variables contribute to the variability in the conditional mean of u which in turn
increases the spread of the lower and upper limits of technical efficiency.

4.5. Uptinml Scale Aspects

In this section the scale properties of the preferred models, DEASV, DFA, and SFA3 are
further explored. In DFA we obtain an optimal scale level of about 330 &tonnes while in
SFA3 the prevalence of constant returns to scale is indicated. The scale properties of a
DEA model are less clear-cut; see F@rsund and Hjalmarsson (1996).
The scale results of the DEASV model are set out in Table 9 and illustrated in Figure
4, where the S-values in equation (2), are plotted and in Figure 5 where all optimal scale
values are presented.

Table 9. Scale properties of DEASV.

Mean Output Output Range

Number of Units ktOMC?S ktonnes

Optimal scale 24 4.59 818-135

Suboptimal 222 226 687-22
Superoptimal 40 624 908-340

900
800
700
-"
2 600
; 500
g 400
0 300
200
100
0

Figure 4. S-valuesand output levels.

DEA, DFA, AND SFA: A COMPARISON 321

FEggure5. Mean values of optimal scale.

The results illustrate the somewhat blurred scale properties of the DEA model. The most
striking result is the large spread in output levels for similar S-values, although there is
a declining trend in output levels for decreasing S-values. Especially, the range of optimal
scale values is very large and overlaps a large part of the suboptimal and superoptimal
output levels, and it also overlaps the DFA optimal scale value of 330 ktonnes. Moreover
there is not time trend in the values of optimal scale. There is, however, a concentration
of mean values around 500 ktonnes.

5. Conclusions

In this paper we discussed three alternative approaches for estimation of technical efficiency,
DEA, DFA, and SFA. We used each of them to estimate the technical efficiency of 15
Colombian cement plants, observed during the period 1968-1988. The objective was to
see whether there are any substantial differences in the efficiency estimates derived from
these three alternative approaches. The elasticity of scale and rate of technical progress
were also analyzed in two specifications. The frontier production technology was represented
by a translog functional form in the SFA and a homothetic one in the DFA.
All models allow for a variable returns to scale. The empirical results, however, vary
substantially across models. DEA generates a large range of optimal scale levels, while
DFA yields a constant level of optimal scale and the most preferred SFA model indicates
constant returns to scale.
In general, the efficiency scores and the time pattern of efficiency vary as much within
each class of models as across models. There is a fairly strong correlation of mean effi-
ciency scores over the years between the main models, DEA with variable returns to scale,
322 L. HJALMARSSON, S.C. KUMBHAKAR and A. HJZSHMATI

DFA, the homothetic frontier with variable returns to scale and SFA3, the stochastic fron-
tier model with control variables. On the other hand the correlation between the intertem-
poral DEA models and other models is much lower (DFA) or even negative (DEAI and
SFA models).
All models generate a slowly declining trend in efficiency over time which is consistent
with the moderate rate of technical progress, about 2-3 % per year, obtained in the parametric
models; see Fc6rsund and Hjalmarsson (1974). Concerning mean plant efficiency, there
is also a fairly high rank correlation between different models, and there are no negative
values.

Acknowledgments

We thank Osvaldo Salas for valuable assistance and for providing the data set and Anders
Hjalmarsson for computer assistance. Valuable comments from the participants at the Ef-
ficiency Measurement Research Workshop are greatly appreciated. Support from the follow-
ing sources is gratefully acknowledged: the Bank of Sweden Tercentenary Foundation,
HSFR, Jan Wallander’s Research Foundation, and Gijteborg School of Economics
Foundation.

Notes

1. Scale efficiency is, of course, meaningless in the case of CRS. It is only derived by solving the LP problem
without restriction (lc).
2. For other specifications see Kumbhakar and H&m&i (1994) and (199.5), Kumbhakar and Hjalmarsson (1995).
3. However, all results arc available on request fmm the autbros.
4. The frontier models are estimated using Frontier 4.0 (Coelli 1994).
5. Capacity utilization and number of kilns are correlated with the level of output and are excluded from SFA2.

Appendix
Table Al. Efficiency scores for all plants and years. Sequential DEA model with variable returns to scale, DEASV. ii
“i
DEASV
Year/Plant 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Mean g
?
1968 1 1 1 1 1 0.75 1 1 0.87 1 1 1 0.97 2
1969 1 1 1 0.87 1 1 0.9 0.94 0.93 0.78 1 1 1 0.96 =:
1970 1 1 0.95 1 1 1 0.86 0.92 0.94 0.77 1 1 1 0.96 ??-
B=
1971 1 1 0.8 1 1 1 1 0.85 0.88 0.82 0.98 1 1 0.95
8
1972 1 1 0.8 0.87 0.95 1 1 1 1 0.82 0.82 0.98 1
1973 0.97 1 0.81 0.91 1 1 1 1 1 0.82 0.9 1 0.97 0.95
0.94 6
1974 1 1 0.83 0.95 0.87 1 1 0.84 1 0.89 0.88 1 0.83 0.93
Z
1975 1 1 0.81 0.83 0.79 0.98 0.93 0.94 0.8 0.81 0.76 1 0.76 0.88
1976 1 1 0.96 1 1 1 0.9 0.75 0.89 0.86 0.88 1 0.77 0.92
1977 1 0.82 1 0.9 1 0.69 0.82 0.95 0.74 0.84 0.9 1 1 0.9
1978 1 0.59 1 1 1 1 0.85 1 0.72 0.93 0.98 1 1 0.71 0.91
1979 1 1 1 1 1 0.77 0.8 1 0.78 0.92 0.91 1 1 0.8 0.93
1980 0.96 1 0.82 1 0.9 0.91 0.82 1 0.65 0.86 0.76 1 1 1 0.91
1981 0.9 1 0.98 1 1 0.76 0.78 1 0.72 0.81 0.84 1 0.83 1 0.9
1982 0.91 0.9 0.96 1 0.91 0.5 0.91 0.88 0.9 0.75 0.93 1 0.85 0.84 0.88
1983 0.84 0.49 1 0.81 0.76 0.67 0.82 0.76 1 1 1 0.89 0.85 1 0.86
1984 0.84 0.71 0.97 1 0.61 0.69 1 0.79 1 1 0.9 1 0.85 0.47 0.86
1985 1 0.81 0.76 0.91 0.59 0.72 1 0.82 1 0.96 1 0.96 0.96 0.89
1986 0.96 0.98 0.42 0.97 0.64 0.96 1 0.82 1 0.99 1 1 0.79 0.9
1987 0.9 0.9 0.45 0.99 0.67 0.84 1 0.89 1 0.95 0.97 1 0.98 0.9
1988 1 1 0.46 1 0.69 0.72 1 0.88 0.98 1 1 0.77 0.94 0.89
Mean 0.97 0.85 0.88 0.94 0.86 0.86 0.94 0.9 0.9 0.91 0.88 0.95 0.96 0.9 0.91 w
Table AZ. Efficiency scores for all plants and years. Deterministic homothetic frontier function, DFA.

DEASV
Y&r/Plant 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Mean

1968 0.74 - 0.71 0.96 0.83 0.86 0.56 0,81 1 0.48 0.83 0.84 0.75 0.78
1969 0.69 - 0.66 0.71 0.81 0.72 0.81 0.67 0.75 0.92 0.43 0.81 0.91 0.83 0.75
1970 0.68 - 0.66 0.71 0.93 0.91 0.86 0.69 0.75 0.86 0.42 0.73 0.95 0.76 0.76
1971 0.69 - 0.63 0.61 1 0.73 0.9 0.72 0.74 0.81 0.45 0.68 1 0.74 0.75
1972 0.75 - 0.65 0.69 0.78 0.72 0.88 0.75 0.71 0.88 0.43 0.6 0.9 0.7 0.73
1973 0.66 - 0.69 0.7 0.8 0.92 0.84 0.65 0.79 0.96 0.51 0.75 0.87 0.64 0.75
1974 0.66 - 0.74 0.81 0.83 0.74 0.86 0.78 0.7 1 0.61 0.74 0.89 0.59 0.77
1975 0.72 - 0.76 0.67 0.71 0.73 0.78 0.75 0.72 0.73 0.57 0.63 0.79 0.52 0.7
1976 0.86 - 0.8 0.71 0.94 0.8 0.86 0.71 0.61 0.82 0.61 0.71 0.76 0.63 0.76
1977 0.86 - 0.64 0.79 0.76 0.78 0.57 0.63 0.74 0.67 0.62 0.76 0.84 0.84 0.73
1978 0.83 0.36 0.81 0.79 0.87 0.82 0.7 0.79 - 0.47 0.82 0.7 0.85 0.72 0.62 0,73
1979 0.79 0.48 0.83 0.82 0.87 0.63 0.64 0.82 0.54 0.82 0.7 0.92 0.88 0.7 0.75
1980 0.74 0.51 0.67 0.9 0.75 0.69 0.66 0.93 0.46 0.77 0.66 0.91 1 0.93 0.76
1981 0.72 0.67 0.78 0.89 0.84 0.61 0.61 0.85 0.48 0.66 0.72 0.91 0.72 0.91 0.74
1982 0.65 0.56 0.77 1 0.81 0.46 0.69 0.77 0.81 0.52 0.66 0.73 0.97 0.75 0.73 0.73
1983 0.66 0.35 0.85 0.8 0.65 0.55 0.64 0.66 0.91 0.63 0.66 0.79 0.8 0.75 0.7 0.69
1984 0.6 0.45 0.81 0.82 0.49 0.61 0.78 0.66 0.92 0.65 0.77 0.76 0.87 0.76 0.27 0.68
1985 1 0.54 0.66 0.83 0.5 0.65 0.82 0.69 0.996 0.68 0.83 O.f?S 0.87 0.59 0.7
1986 0.64 0.68 0.39 0.85 0.56 0.85 0.84 0.69 1 0.71 - 0.86 0.96 0.63 0.55 0.73
1987 0.66 0.71 0.41 0.87 0.6 0.74 0.86 0.53 1 0.75 0.81 0.84 0.85 0.68 0.74
1988 0.73 0.73 0.43 0.93 0.58 0.65 0.84 0.56 1 0.13 - 0.93 0.96 0.63 0.63 0.74
Mean 0.73 0.55 0.68 0.79 0.76 0.72 0.78 0.71 0.95 0.67 0.81 0.65 0.81 0.82 0.68 0.74
Table A3. Efficiency scores for all plants and years. Stochastic frontier model, SFA3. 9
G
DEASV
Year/Plant 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Mean

1968 0.97 - - 0.96 0.95 0.94 0.96 0.74 - 0.97 0.98 0.83 0.94 0.95 0.91 0.93
1969 0.95 - 0.96 0.96 0.88 0.92 0.96 0.89 - 0.97 0.98 0.75 0.93 0.97 0.94 0.93
1970 0.95 - 0.95 0.97 0.9.5 0.92 0.98 0.92 - 0.97 0.98 0.72 0.93 0.98 0.91 0.93
1971 0.95 - 0.93 0.97 0.96 0.93 0.98 0.95 - 0.97 0.97 0.74 0.92 0.98 0.92 0.94
1972 0.96 - 0.94 0.96 0.92 0.93 0.97 0.96 - 0.98 0.98 0.66 0.89 0.97 0.92 0.93
1973 0.9 - 0.96 0.96 0.94 0.91 0.97 0.93 - 0.98 0.99 0.81 0.96 0.97 0.89 0.94
1974 0.88 - 0.98 0.96 0.95 0.93 0.97 0.96 - 0.97 0.99 0.92 0.96 0.97 0.76 0.94
1975 0.93 - 0.97 0.93 0.87 0.88 0.95 0.87 - 0.97 0.97 0.85 0.88 0.94 0.67 0.9
1976 0.97 - 0.98 0.96 0.97 0.94 0.97 0.92 - 0.82 0.98 0.91 0.95 0.95 0.81 0.93
1977 0.96 - 0.91 0.97 0.87 0.9 0.79 0.83 - 0.97 0.95 0.88 0.95 0.96 0.96 0.92
1978 0.96 0.5 0.97

-
326 L. HJALMARSSON, SC. KUMBHAKAR and A. HESHMATI

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