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Advanced X-efficiencies for CCR- and BCC-models – towards Peer-based DEA controlling

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  • Rödder, W.
  • Reucher, E.

Abstract

Classical CCR and BCC DEA-models follow a general concept: they allow each DMU to evaluate its (in-) efficiency in the most favorable way, and then propose input reduction and/or output raise so as to follow its best practice units. A first step beyond this ‘self-appraisal’ is the consideration of X-efficiencies thus evaluating DMUs with optimal weights of a peer. Doing this for all possible peers yields a cross-efficiency matrix, either for CCR or for BCC models. This matrix might help to find a fair peer for the remaining DMUs. In a second step recent contributions analyze for CCR-models how such X-evaluated DMUs might improve their efficiency with respect to a peer’s weight system. In these models even free variation of inputs/outputs is possible rather than reduction and/or raise. Such models will be portrayed here and generalized for variable returns to scale. The remaining discomfort which a DMU might feel with the choice for peer among business rivals, leads to the concept of a ‘virtual peer’ VP. This paper proposes such a peer as a consensual option for all DMUs. Now for either return to scale – CCR and BCC – for an input or output oriented focus and by free variation of inputs and outputs they can meet the requirements of VP. The DMUs pay a heavy price, however: the peer controls their respective weights and even their activities; he is a dictator.

Suggested Citation

  • Rödder, W. & Reucher, E., 2012. "Advanced X-efficiencies for CCR- and BCC-models – towards Peer-based DEA controlling," European Journal of Operational Research, Elsevier, vol. 219(2), pages 467-476.
    • Handle: RePEc:eee:ejores:v:219:y:2012:i:2:p:467-476
    DOI: 10.1016/j.ejor.2011.12.024
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