Aggregation of efficiency indices

Measurement of technical efficiency is carried out at many levels of aggregation-at the individual branch, plant, division, or district level; at the company- or organization-wide level; at the industry or sectoral level; or at the economy-wide level. In this paper, we examine the conditions under which these indexes constructed at various levels of aggregation can be consistent with one another-that is, the extent to which efficiency indexes can be consistently aggregated. Unfortunately, our results are discouraging, indicating that very strong restrictions on the technology and /or the efficiency index itself are required to enable consistent aggregation (or disaggregation).