Efficiency measurement is a key concept in performance evaluation and possesses practical significance for resource allocation among competing entities. Efficiency and demand of input parameters are two determining factors influencing decision making process. This paper presents a theoretical framework to measure efficiency and demand for production factors simultaneously based on stochastic extension of Data Envelopment Analysis (DEA). It incorporates Cobb-Douglas type production function and choice theoretic approach in DEA structural formulation. The methodology is applied to measure regional performance in Bangladesh and results indicate the existence of disparities in efficiency among regions within the country. Estimated production function demonstrates increasing return to scale characteristics and indicates price elasticity of demand for accessibility to be -0.90. The proposed framework provides valuable insights regarding regional production process and constitutes an appealing potential for future research.
Abstract