Measuring efficiency using isoquants in input-productivity space. Multiple-input case

The article presents a method of establishing efficiency of business units when a result (e.g. production, profit, income) is obtained with more than one input. This approach is a generalization of a method presented in [4]. It is based on partial efficiency isoquants in the input-productivity space that were discussed in [5]. According to this approach the author suggests the following steps for measuring efficiency: a) establishing unit isoquants on the basis of inputs and outputs data; b) establishing technological radius corresponding with assumed proportion of inputs (or assumed proportion of productivities); c) finding intersections of technological radius and each unit isoquant; d) establishing the distance of the isoquant from the origin, measured along the assumed technological radius. Suggested approach does not require solving the programming task in order to establish the apexes of efficiency frontier – which is an important simplification compared to e.g. standard DEA methods.