GRIPS 政策研究センター Policy Research Center


Oct 1, 2009 Report No:09-14

Technical efficiency based on cost gradient measure

  • Yuichiro YoshidaGRIPS
  • Kaoru ToneGRIPS
  • Miki TsutsuiCentral Research Institute of Electric Power Industry
Language English

This study introduces a new scheme of data envelopment analysis (DEA) named cost gradient measure (CGM) to evaluate technical efficiency. In this model, we can obtain more cost conscious technical efficiency than those by other traditional DEA models such as CCR[7] and slacks-based measure (SBM) [19]. In addition, the CGM can avoid shortcomings of these traditional models, i.e. factor inefficiency scores can be measured for each input as opposed to CCR and SBM models. In this study, we show the generality of CGM that it includes CCR as a special case; and compare the CGM result with those of the other DEA models using illustrative data, and clarify favorite features of this model. In addition, we also apply these models to Japanese electric utilities and explain the characteristics of their results.

Keywords cost gradient measure, DEA, technical efficiency, input price
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