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Marginal Values and Returns to Scale for Nonparametric Production Frontiers

Author

Listed:
  • Victor V. Podinovski

    (School of Business and Economics, Loughborough University, Loughborough LE11 3TU, United Kingdom)

  • Robert G. Chambers

    (Department of Agricultural and Resource Economics, University of Maryland, College Park, Maryland 20742)

  • Kazim Baris Atici

    (Department of Business Administration, Hacettepe University, Ankara 06800, Turkey)

  • Iryna D. Deineko

    (Warwick Business School, University of Warwick, Coventry CV4 7AL, United Kingdom)

Abstract

We present a unifying linear programming approach to the calculation of various directional derivatives for a very large class of production frontiers of data envelopment analysis (DEA). Special cases of this include different marginal rates, the scale elasticity, and a spectrum of partial and mixed elasticity measures. Our development applies to any polyhedral production technology including, to name a few, the conventional variable and constant returns-to-scale DEA technologies, their extensions with weight restrictions, technologies with weakly disposable undesirable outputs, and network DEA models. Furthermore, our development provides a general method for characterization of returns to scale (RTS) in any polyhedral technology. The new approach effectively removes the need to develop bespoke models for the RTS characterization and calculation of marginal rates and elasticity measures for each particular technology.

Suggested Citation

  • Victor V. Podinovski & Robert G. Chambers & Kazim Baris Atici & Iryna D. Deineko, 2016. "Marginal Values and Returns to Scale for Nonparametric Production Frontiers," Operations Research, INFORMS, vol. 64(1), pages 236-250, February.
    • Handle: RePEc:inm:oropre:v:64:y:2016:i:1:p:236-250
    DOI: 10.1287/opre.2015.1457
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    References listed on IDEAS

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