Measurement efficiency and returns to scale with quasifixed inputsan application of dynamic dea to infrastructure services in Spanish ports

Resum

Port facilities have indivisibilities and a long service life, which classifies them as quasifixed inputs, meaning that they cannot be immediately adjusted and that contribute to the production of port services over long periods of time. Properly handling these types of inputs requires a dynamic approach that acknowledges the intertemporal relationship between the inputs used and the resulting outputs. In this paper, we employ a dynamic non-parametric Data Envelopment Analysis methodology to calculate the intertemporal cost frontier for the services provided by Spanish port facilities from 2000 to 2007. Based on this frontier we estimate the overall efficiency for the 27 port authorities in Spain, as well as their technical, allocative and dynamic efficiency components. We also identify the returns to scale under which each port operates. The results reveal a global inefficiency which is explained mainly by the dynamic inefficiency and, to a lesser extent, by the inefficient use of labor and of the intermediate inputs. Finally, by comparing the results with those obtained from a static DEA model, we show that if the quasifixed condition of the infrastructure is ignored, all of the global inefficiency components are overestimated. The type of the returns to scale assumed to apply can also be distorted.