The use of parametric and non-parametric frontier methods to measure the productive efficiency in the industrial sector: A comparative study

Parametric frontier models and non-parametric methods have monopolised the recent literature on productive efficiency measurement. Empirical applicati ons have usually dealt with either one or the other group of techniques. Th is paper applies a range of both types of approaches to an industrial organ isation setup. The joint use can improve the accuracy of both, although som e methodological difficulties can arise. The robustness of different method s in ranking productive units allows us to make a comparative analysis of t hem. Empirical results concern productive and market demand structure, retu rns-to-scale, and productive inefficiency sources. The techniques are illus trated using data from the US electric power industry. (C) 2001 Elsevier Sc ience B.V. All rights reserved.