Properties of inefficiency indexes on input, output space

We analyze efficiency measurement in the full ⟨input, output⟩ space. We posit four types of axioms: indication (of efficient production bundles), monotonicity, independence of units of measurement, and continuity (in technologies as well as input and output quantities). Impossibility results establish a tension between indication and continuity. We focus on seven well-known inefficiency indexes from the operations-research and economics literature, establishing the properties they satisfy–and do not satisfy–on a general class of technologies satisfying minimal regularity conditions and on the subset of these technologies satisfying convexity. We also discuss several other indexes that are dominated by or very similar to these seven indexes. The set of properties satisfied by these indexes elucidates the trade-offs faced in selecting among the indexes.