Nonparametric Efficiency Analysis under Uncertainty: A First-Order Stochastic Dominance Approach
May 2002
Article
pp 183-200.
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This paper extends the nonparametric approach to efficiency analysis to deal with uncertainty of input-output prices.We generalize the notion of economic efficiency to derive necessary and sufficient first-order stochastic dominance (FSD) efficiency conditions. Interestingly, the FSD conditions include as limiting cases the traditional conditions for economic efficiency and technical efficiency. Furthermore, we propose empirical tests for these FSD
Keywords
- stochastic dominance
- data envelopment analysis
- electricity distribution sector
- nonparametric efficiency analysis
- performance evaluation under uncertainty
