Ine ciency

We introduce an ordinal model of e ciency measurement. Our primitive is a notion of e ciency that is comparative, but not cardinal or absolute. In this framework, we postulate axioms that we believe an ordinal e ciency measure should satisfy. Primary among these are choice consistency and planning consistency, which guide the measurement of e ciency in a firm with access to multiple technologies. Other axioms include symmetry, which states that the names of commodities do not matter, scale-invariance, which says that units of measurement of commodities does not matter, and strong monotonicity, which states that e ciency should decrease if the inputs and outputs remain static when the technology becomes unambiguously more efficient. These axioms characterize a unique ordinal e ciency measure which is represented by the coe cient of resource utilization. By replacing symmetry (the weakest of our axioms) with a very mild continuity condition, we obtain a family of path-based measures. ⇤Department of Economics, University of California, San Diego, 9500 Gilman Drive, #0508, La Jolla, CA 920930508. Email: [email protected] Web: http://econ.ucsd.edu/⇠cpchambers/ †Faculty of Law and Department of Economics, University of Haifa, Mount Carmel, Haifa, 31905, Israel. Email: [email protected] Web: http://econ.haifa.ac.il/⇠admiller/ ‡Acknowledgments will come in a final version. 1