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Efficiency Measures
Studies on efficiency measurement have often yielded divergent results due to the influence of non-discretionary environmental factors. While various methods like Data Envelopment Analysis (DEA) and Stochastic Frontier Approaches (SFA) have been used to address this, the distinction between factors affecting efficiency directly versus those impacting production sets is crucial. A recently developed separability test clarifies this distinction, enabling appropriate adjustments. For factors affecting efficiency distribution, a two-stage OLS regression model can be used. However, for those impacting production sets, Conditional Frontier Analysis (CFA) is necessary.
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