Measuring Technical and Scale Inefficiencies in the Beer Industry: Nonparametric and Parametric Evidence

The Quarterly Review of Economics and Finance (1993), 33:4, pp. 383-408

Fox School of Business Research Paper

26 Pages Posted: 17 Jun 2014

See all articles by Elyas Elyasiani

Elyas Elyasiani

Temple University - Department of Finance

Seyed Mehdian

Ohio State University

Date Written: 1993

Abstract

Two alternative approaches of efficiency measurement, nonparametric and statistical, are employed to calculate three types of efficiency indexes for the U.S. beer industry over the period 1950-1986. The results indicate that the beer industry was operating at a high level of pure technical efficiency over that period. The mean value of this efficiency measure is 93.7 percent based on the nonparametric approach and 87.5 percent based on the statistical approach. The two approaches yield dissimilar values and sources for overall technical inefficiency. The overall technical efficiency index computed under the nonparametric approach stands at 91.10 percent and the observed inefficiency is found to be more due to pure technical inefficiency than to scale inefficiency. Using the statistical approach, the beer industry is found to be less overall technically efficient (68.42 percent) than indicated by the nonparametric methodology and the observed inefficiency is found to be primarily contributed to by scale inefficiency.

Suggested Citation

Elyasiani, Elyas and Mehdian, Seyed, Measuring Technical and Scale Inefficiencies in the Beer Industry: Nonparametric and Parametric Evidence (1993). The Quarterly Review of Economics and Finance (1993), 33:4, pp. 383-408; Fox School of Business Research Paper. Available at SSRN: https://ssrn.com/abstract=2451195

Elyas Elyasiani (Contact Author)

Temple University - Department of Finance ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-5881 (Phone)
215-204-5698 (Fax)

Seyed Mehdian

Ohio State University ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States
614-366-9253 (Phone)

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