The concept of cost efficiency was introduced by Farrell (1957) as
the ratio of factor minimal cost to the actual cost. Unlike
technical efficiency, the cost efficiency measure takes into
consideration changes in input mix also. The Farrell cost
efficiency measure was extended by Fare et.al (1984) for the case
of multiple inputs and outputs. Solving one linear programming
problem for one production unit, the factor minimal cost can be
calculated which is called in this study as 'Farrell Cost
Efficiency'. This is a very restrictive measure since it requires
the knowledge of input prices and these prices are assumed to be
constant.This book describes the concepts of various types of
market efficiencies of decision making units (DMU's) such as price
efficiency, Farrell cost efficiency, Economic efficiency, Input
technical efficiency and Input Associative efficiencies. The study
aims at evaluating the cost efficiencies of 77 Indian commercial
Banks employing a wide variety of inputs in order to produce a
spectrum of outputs.
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