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Estimating returns to scale using nonparametric deterministic technologies : a new method based on goodness-of-fit

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  • KERSTENS, Kristiaan

    (LABORES, Université catholique de Lille, Lille)

  • VANDEN EECKAUT, Philippe

    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Abstract

The purpose of this note is to define a new and more general method to obtain qualitative information about returns to scale for individual observations. In a second section the traditional methods developed for estimating returns to scale on nonparametric deterministic reference technologies (Data Envelopment Analysis (DEA) models) are reviewed. Section 3 provides a new and more general method that is suitable for all reference technologies. Its usefulness is illustrated by considering variations on an existing non-convex production model, known as the Free Disposal Hull (FDH). When different returns to scale assumptions are introduced into the FDH, then previous methods for determining returns to scale do no longer apply.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997013.

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Date of creation: 01 Feb 1997
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Handle: RePEc:cor:louvco:1997013

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Keywords: returns to scale; FDH; DEA;

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References

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Citations

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Cited by:
  1. Trigo Gamarra, Lucinda, 2007. "Single- versus multi-channel distribution strategies in the German life insurance market: A cost and profit efficiency analysis," Thuenen-Series of Applied Economic Theory 81, University of Rostock, Institute of Economics.
  2. Marques, Rui Cunha & De Witte, Kristof, 2011. "Is big better? On scale and scope economies in the Portuguese water sector," Economic Modelling, Elsevier, vol. 28(3), pages 1009-1016, May.
  3. Victor Podinovski, 2009. "Production technologies based on combined proportionality assumptions," Journal of Productivity Analysis, Springer, vol. 32(1), pages 21-26, August.
  4. Kristof Witte & Rui Marques, 2011. "Big and beautiful? On non-parametrically measuring scale economies in non-convex technologies," Journal of Productivity Analysis, Springer, vol. 35(3), pages 213-226, June.
  5. KERSTENS , Kristiaan & VANDEN EECKAUT, Philippe, 1998. "Distinguishing technical and scale efficiency on non-convex and convex technologies: theoretical analysis and empirical illustrations," CORE Discussion Papers 1998055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Walter Briec & Kristiaan Kerstens, 2006. "Input, output and graph technical efficiency measures on non-convex FDH models with various scaling laws: An integrated approach based upon implicit enumeration algorithms," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer, vol. 14(1), pages 135-166, June.
  7. M. Soleimani-damaneh, 2013. "Another approach for estimating RTS in dynamic DEA," Journal of Productivity Analysis, Springer, vol. 39(1), pages 75-81, February.
  8. MAIRESSE, François & VANDEN EECKAUT, Philippe, 1999. "Museum assessment and FDH technology: a global approach," CORE Discussion Papers 1999038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Sergio Destefanis & Vania Sena, 2005. "Public capital and total factor productivity: New evidence from the Italian regions, 1970-98," Regional Studies, Taylor & Francis Journals, vol. 39(5), pages 603-617.
  10. Fukuyama, Hirofumi, 2003. "Scale characterizations in a DEA directional technology distance function framework," European Journal of Operational Research, Elsevier, vol. 144(1), pages 108-127, January.
  11. Subhash C. Ray, 2010. "A One-Step Procedure for Returns to Scale Classification of Decision Making Units in Data Envelopment Analysis," Working papers 2010-07, University of Connecticut, Department of Economics.
  12. François Mairesse & Philippe Vanden Eeckaut, 2002. "Museum Assessment and FDH Technology: Towards a Global Approach," Journal of Cultural Economics, Springer, vol. 26(4), pages 261-286, November.
  13. Crosato, Lisa & Destefanis, Sergio & Ganugi, Piero, 2007. "Technology and Firm Size Distribution:Evidence from Italian Manufacturing," CELPE Discussion Papers 102, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  14. Kuosmanen, Timo, 2001. "DEA with efficiency classification preserving conditional convexity," European Journal of Operational Research, Elsevier, vol. 132(2), pages 326-342, July.
  15. Leleu, Herve, 2006. "A linear programming framework for free disposal hull technologies and cost functions: Primal and dual models," European Journal of Operational Research, Elsevier, vol. 168(2), pages 340-344, January.
  16. Podinovski, V. V., 2004. "On the linearisation of reference technologies for testing returns to scale in FDH models," European Journal of Operational Research, Elsevier, vol. 152(3), pages 800-802, February.
  17. Ramón Mª-Dolores, 2004. "Public capital effects on spanish regions productivity: a non-parametric approach (1965-1998)," Hacienda Pública Española, IEF, vol. 171(4), pages 57-74, december.
  18. Erbetta, Fabrizio & Rappuoli, Luca, 2008. "Optimal scale in the Italian gas distribution industry using data envelopment analysis," Omega, Elsevier, vol. 36(2), pages 325-336, April.
  19. Keshvari, Abolfazl & Kuosmanen, Timo, 2013. "Stochastic non-convex envelopment of data: Applying isotonic regression to frontier estimation," European Journal of Operational Research, Elsevier, vol. 231(2), pages 481-491.
  20. Walter Briec & Kristiaan Kerstens & Hervé Leleu & Philippe Eeckaut, 2000. "Returns to Scale on Nonparametric Deterministic Technologies: Simplifying Goodness-of-Fit Methods Using Operations on Technologies," Journal of Productivity Analysis, Springer, vol. 14(3), pages 267-274, November.

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