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Journal Articles
March 2007
Article
Long- and short-term cost efficiency frontier evaluation: evidence from Spanish local governments
Type: Journal Articles
Authors: Victor M. Giménez and Diego Prior
ISSN: Print: 0143-5671 Online: 1475-5890
Volume, issue, pages: Vol. 28, No. 1, pp. 121-139
JEL classification: D24, D60, H71, H72

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This paper analyses the efficiency of Spanish local governments using non-convex frontier methods. More specifically, it analyses the total cost inefficiency and proposes its decomposition into three additive components: short-term variable cost inefficiency; capacity utilisation of fixed inputs; and scale inefficiency. The second and third components correspond to the long-term cost efficiency notion. The proposition is applied to a sample of Spanish municipal councils (municipalities with over 2,000 inhabitants located in Catalonia, the Spanish north-eastern region). The results confirm the existence of significant cost inefficiency coefficients related to both the long and short term.

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