Efficiency Measures for Industrial Organization



The aim of the paper was to measure the efficiency of an industry and to decompose it in firm efficiencies—which indicate how close firms approximate best practices—and an organization efficiency—which indicates the degree of optimality of the number of firms and their distribution. The latter component provides an efficiency measure for the industrial organization. Economies or diseconomies of scale and of scope play a big role in the determination of the optimal industrial organization and the consequent measurement of the efficiency of an observed industry. Different approaches to the modeling of scale economies will be reviewed. This paper shows in detail how the efficiency of an industrial organization can be measured as a gap between mean firm efficiency and overall industry efficiency. The analysis is extended to dynamic models to measure the role of entry and exit in the efficiency of the industrial organization.


Data Envelopment Analysis Industrial Organization Constant Return Shadow Price Variable Return 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



I am grateful to editor Subhash Ray for numerous comments and suggesting to let the static efficiency model encompass productivity growth analysis.


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© Springer India 2015

Authors and Affiliations

  1. 1.Tilburg School of Economics and ManagementTilburg UniversityTilburgNetherlands

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