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New Method Boosts Efficiency of Economics Departments at Dutch Universities

The Law of One Price in Data Envelopment Analysis: Restricting Weight Flexibility Across Firms
Timo Kuosmanen, Laurens Cherchye, Timo Sipiläinen

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The Law of One Price (LoOP) says all firms pay the same prices for their stuff. This can help us figure out how efficient companies are. A new method called Data Envelopment Analysis (DEA) uses LoOP to compare firms' costs. By setting common input prices for all firms, we can see which ones are doing well. This method was tested on economics departments in Dutch Universities and found to be useful for analyzing efficiency.