Scale efficiency and productivity change

The first objective of this paper is to develop a generic measure of scale efficiency for a multiple-input multiple-output firm, using basic: principles of modern production theory. The second objective is to combine measures of technological change, technical efficiency change, and scale efficiency change into an encompassing (primal) measure of productivity change. This measure and its decomposition is compared to a number of recent proposals in order to shed light on what seems to have become a controversial issue. The paper proceeds by developing an encompassing dual measure of productivity change. This dual measure is then applied to panel data of a set of Dutch firms, continuing the empirical work of Balk (1998). It turns out that extending the Malmquist productivity index with factors measuring scale efficiency change and input mix change leads to appreciably different outcomes.