Time-inconsistency in DEA : a study of Norwegian factory trawlers

Abstract

DEA is widely used to assess efficiency and returns to scale of production units. Such analysis will be useful only to the extent the data used are representative of efficiency over time, but often the data used are likely to be cross section observations for only one year. This paper reports DEA for Norwegian factory trawlers for a 12-year period and concludes that there are shifts in efficiency scores that fail to identify a time-consistent hierarchy of production units in terms of efficiency. Likewise, the analysis largely fails to identify vessels of an optimal scale.