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Alternative Approaches to Estimate Returns to Scale in DEA- Models

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  • Löthgren, Mickael

    (Department of Economic Statistics)

  • Tambour, Magnus

    (Centre for Health Economics)

Abstract

This paper presents a number of approaches to estimate returns to scale properties of general multiple-input muliple-output technologies. Both qualitative scale efficiency-properties and quantitative scale elasticity-properties are covered. The estimation approaches considered are based on data envelopment analysis (DEA)-models using primal production data on inputs and outputs. We propose an approach to estimate scale elasticity based on the primal efficiency problem. This alternative approach is derived as a direct approximation of the differentials of the efficiency measures in the scale elasticity definition. The different approaches to estimate scale efficiency and scale elasticity are exemplified and compared using a small dataset.

Suggested Citation

  • Löthgren, Mickael & Tambour, Magnus, 1996. "Alternative Approaches to Estimate Returns to Scale in DEA- Models," SSE/EFI Working Paper Series in Economics and Finance 90, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0090
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    References listed on IDEAS

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    1. Banker, Rajiv D. & Thrall, R. M., 1992. "Estimation of returns to scale using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 62(1), pages 74-84, October.
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    4. Banker, Rajiv D., 1984. "Estimating most productive scale size using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 17(1), pages 35-44, July.
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    7. Joe Zhu & Zhao-Han Shen, 1995. "A discussion of testing DMUs' returns to scale," European Journal of Operational Research, Elsevier, vol. 81(3), pages 590-596, March.
    8. Forsund, F.R., 1995. "A Note on the Calculation of the Scale Elasticity in DEA Models," Memorandum 1995_034, Oslo University, Department of Economics.
    9. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    10. Fare, Rolf & Grosskopf, Shawna, 1994. "Estimation of returns to scale using data envelopment analysis: A comment," European Journal of Operational Research, Elsevier, vol. 79(2), pages 379-382, December.
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    Cited by:

    1. Kerstens, Kristiaan & Vanden Eeckaut, Philippe, 1999. "Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit," European Journal of Operational Research, Elsevier, vol. 113(1), pages 206-214, February.
    2. Malgorzata Pawlowska, 2003. "The Impact of M&A on Technical Efficiency, Scale Efficiency and Productivity Change in the Polish Banking Sector: a Non-Parametric Approach," NBP Working Papers 29, Narodowy Bank Polski.
    3. Simar, Leopold & Wilson, Paul W., 2002. "Non-parametric tests of returns to scale," European Journal of Operational Research, Elsevier, vol. 139(1), pages 115-132, May.
    4. Khem Sharma & Pingsun Leung & Halina Zaleski, 1997. "Productive Efficiency of the Swine Industry in Hawaii: Stochastic Frontier vs. Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 8(4), pages 447-459, November.
    5. Kaoru Tone & Biresh Sahoo, 2006. "Re-examining scale elasticity in DEA," Annals of Operations Research, Springer, vol. 145(1), pages 69-87, July.

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    More about this item

    Keywords

    Data envelopment analysis; scale efficiency; scale elasticity; dual linear programming;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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