New methodology revolutionizes efficiency analysis in Economics, shaping future productivity.
Efficiency in economics has been a hot topic for researchers, who want to see how well different economic activities are running. This study looked at how the methods for measuring efficiency have changed over time. They found that there are two main types of efficiency: technical efficiency, which is about how well you can produce things, and allocative efficiency, which is about using resources in the best way. The study showed that there are different ways to measure efficiency, like using linear programming or input distance functions. Overall, the best way to measure allocative efficiency is with input distance functions when input quantities are similar across different units.