Quantity, Quality, and Efficiency for a Partially Super-Additive Cost Function: Connecticut Public Schools Revisited

The dual cost function is partially super-additive when an output quantity bundle of a given quality can be produced at a lower cost by breaking up the output into a number of smaller bundles of the same quality to be produced by several firms instead of the entire bundle being produced by a single firm. In this paper, we build on Maindiratta's concept of size efficiency and propose a nonparametric method using mixed integer programming to measure cost efficiency allowing for partial super-additivity of the cost function. The proposed method is applied to data from Connecticut public school districts for the years 1980–81 through 1983–84. Copyright Kluwer Academic Publishers 1998