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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), pp. 405-416.

Record type: Article


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.

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Published date: 2001
Keywords: inefficiency spillovers production frontier


Local EPrints ID: 33420
ISSN: 0953-5314
PURE UUID: d9c91cce-9df5-416a-9e0a-d4235120d44f

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Date deposited: 16 May 2006
Last modified: 17 Jul 2017 15:52

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Author: Giovanni Pica

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