ABSTRACT
INTRODUCTION In this chapter, data envelopment analysis (DEA) is used to assess the level of technical efficiency in ten of our eleven organisations. Britoil is excluded because of inadequate data. As in previous chapters, efficiency is measured for a number of years before and after privatisation. DEA is a nonparametric method that allows efficiency to be measured without having to specify either the form of the production function or the weights for the different inputs and outputs used. It can be viewed as a generalisation of TFP methods in the sense that efficiency is defined as a multi-variate ratio of the weighted sum of outputs to weighted sum of inputs. It is non-parametric because the nature of the functional form between outputs and inputs is not specified in advance. It is therefore highly flexible.
