Estimating the economic entities efficiency on the basis of partial efficiency isoquants

The author of the article describes a method for estimating the efficiency of economic entities that produce one output using more than one input. The method consists in constructing isoquants for each object in the space of productivity of inputs. For a given object quantities of inputs are the isoquant parameters and partial productivities of inputs are the arguments. Further analysis consists in defining efficiency limit which is such an edge that all the isoquants are dominated by it. The efficiency of a given object is estimated on the basis of the distance between the isoquant and the efficiency limit calculated along the assumed technological radius. To make the considerations easier the author analysis three types of technological radius for a given object: (a) the radius settled a priori (which means that all the objects are examined under the same external criterion), (b) the individual radius (which is similar to Data Envelopment Analysis), and (c) the cone-shaped radius.