No. 4/2009: EFFICIENCY POTENTIAL AND DETERMINANTS OF EFFICIENCY: AN ANALYSIS OF THE CARE FOR THE ELDERLY SECTOR IN NORWAY. Lars Erik Borge and Marianne Haraldsvik Abstract: The paper provides an analysis of efficiency in the care for the elderly sector in Norway. In a first step we perform DEA analysis to calculate the degree of efficiency in each municipality and the national level efficiency potential. The analysis reveals substantial variation in efficiency across municipalities, and the national level efficiency potential is calculated to 10%. Tobit regressions and recently developed bootstrap methods are applied in a second stage to explain the variation in efficiency. The second stage analyses indicate that high fiscal capacity, a low degree of user charge financing, and a fragmented local council are associated with low efficiency.