TWO-STAGE DEA ESTIMATION OF TECHNICAL EFFICIENCY: COMPARISON OF DIFFERENT ESTIMATORS

Abstract

Research background: The challenge of resource limitations requires that farmers make judicious use of resources to maximize output and profit levels. This can be achieved through assessment of resource-use efficiency of farmers by estimating the level of technical efficiency and the determining factors. Purpose of the article: This paper compared the results of alternate DEA methodologies and applied different estimators to measure the influence of exogenous factors on technical efficiency of groundnut farmers in northern Ghana. Methods: The study used the traditional and double bootstrap DEA approaches to estimate technical efficiency while in the second stage, OLS, Tobit and double bootstrap techniques were used to estimate the influence of exogenous factors on efficiency. Findings & Value added: The double bootstrap DEA approach produced a mean technical efficiency of 51 per cent compared to 70 per cent for the traditional DEA approach. Concerning the determinants of technical efficiency, the DEA with Tobit (DEA+Tobit), DEA with OLS (DEA+OLS), and Simar and Wilson’s double bootstrap DEA (SW-DEA) procedures produced very similar results. The findings shed light on two-stage DEA estimation as well as the modelling of the influence of exogenous factors on the DEA scores.