Efficiency decompositions for heterogeneous technologies

This paper examines firms operating under different technologies but under a common metatechnology and provides a decomposition of their efficiency into input-invariant and output-invariant components. To achieve this, it reviews known definitions of technical and scale efficiency and provides alternative expressions, which incorporate a firm operating at the most productive scale size. By extending this approach, analogous decompositions are derived for the gap between two technologies and the (technical) efficiency difference between two firms operating under two distinct technologies or metatechnologies. Two indicative case-studies are also presented in order to illustrate the applicability of the proposed framework.