Measuring productive efficiency incorporating firms' hetrogenety: An empirical Analysis

Abstract

Heterogeneity among firms is quite prevalent in industries. Using the random coefficients model, this paper aims to measure productive efficiency of firms allowing heterogeneity of firms. Firm level data from the Bangladesh food manufacturing are used for empirical estimation. The results show that there are wide variations in efficiency across firms attributable to firms’ heterogeneity. Further, it shows that there is ample scope for increasing efficiency from the given resources and technology.