Inefficiency spillovers in five OECD countries: an interindustry analysis

Pica, Giovanni (2001) Inefficiency spillovers in five OECD countries: an interindustry analysis. Economic System Research, 13, (4), 405-416.


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Empirical studies have widely demonstrated that real-world activities are rarely on their production frontier. Hence, an obvious concern arises towards the detection of inefficiencies affecting sectoral performances. The current literature and practice have widely explored the sources of inefficiency internal to decision-making units. This paper argues that a major role is played by external effects due to inefficiency spillovers propagating through interindustry transactions. In order to take this mechanism into account, the paper suggests assessing sectoral performances by a system approach that makes use of shadow prices of intermediate inputs. Our approach is able to disentangle sectoral inefficiencies into internal sectoral inefficiencies and inefficiencies imported from other sectors. The latter component is due to inefficiency spillovers that appear to be empirically relevant in all sectors of five OECD countries.

Item Type: Article
ISSNs: 0953-5314 (print)
Related URLs:
Keywords: inefficiency spillovers production frontier
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions : University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33420
Accepted Date and Publication Date:
Date Deposited: 16 May 2006
Last Modified: 27 Mar 2014 18:20

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