Dynamic Efficiency Analysis using a Directional Distance Function

Input-based dynamic efficiency measures are derived from an adjustment-cost directional distance function approach. A dynamic input directional distance function can be generated from an adjustment-cost technology where the dynamics are explicitly incorporated in the form of the properties of the input requirement sets with respect to the quasi-fixed factors. The properties of the dynamic input directional distance function are inherited from the properties of the technology. The efficiency measures are then applied to a panel data set of Dutch horticulture firms over the period 1991-1995.