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Farrell Revisited: Visualising the DEA Production Frontier

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Author Info
Førsund , Finn R. () (Dept. of Economics, University of Oslo)
Kittelsen , Sverre A. (Ragnar Frisch Centre of Economic Research)
Krivonozhko , Vladimir E. (Institute for Systems Analysis)

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Abstract

The contributions of the paper are threefold: i) compare with mathematical rigour the Charnes, Cooper, and Rhodes DEA model and the Farrell model exhibiting constant returns to scale, ii) reinterpret the contribution of Farrell and Fieldhouse that extended the analysis to variables returns to scale and establish the connection with the approach in Banker, Charnes and Cooper, iii) provide graphical visualisation of properties of the frontier function. Both papers by Farrell emphasised the importance of graphical visualisation of non-parametric frontier functions, but, to our knowledge, this is seldom followed up in the literature. We use a graphical package (EffiVision) with a numerical representation of the frontier functions, representing the contemporary development of visualisation. By making suitable cuts through the DEA frontier in multidimensional space, various graphical representations of features of economic interest can be done. Development of ray average cost function and scale elasticity are novel illustrations.

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File URL: http://www.oekonomi.uio.no/memo/memopdf/memo1507.pdf
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Publisher Info
Paper provided by Oslo University, Department of Economics in its series Memorandum with number 15/2007.

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Length: 31 pages
Date of creation: 01 Feb 2007
Date of revision:
Publication status: Published in Journal of the Operational Research Society, 2009, pages 1535-1545.
Handle: RePEc:hhs:osloec:2007_015

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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
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Web page: http://www.oekonomi.uio.no/indexe.html
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Related research
Keywords: Farrell efficiency measure; DEA; variable returns to scale; visualisation; grouping method;

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Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity

References listed on IDEAS
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  1. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November. [Downloadable!] (restricted)
  2. Finn R. Førsund & Nikias Sarafoglou, 2005. "The Tale of Two research Communities: The Diffusion of Research on Productive Efficiency," Department of Economics University of Siena 446, Department of Economics, University of Siena. [Downloadable!]
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This page was last updated on 2009-11-26.


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