In this paper, we offer a non-parametric method of decomposing the Fisher Ideal index of productivity into individual factors measuring: (i) technical efficiency change, (ii) allocative efficiency change, (iii) shift in the cost function, (iv) scale economies due to output change, and (v) an adjustment factor reflecting change in the output attributes. Cross section data from the US airline industry for the years 1983 and 1984 are utilised in an empirical application illustrating this method.
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Ray et al. (1996) studied this question.
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