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Maintaining the Regular Ultra Passum Law in data envelopment analysis

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  • Olesen, Ole B.
  • Ruggiero, John

Abstract

The variable returns to scale data envelopment analysis (DEA) model is developed with a maintained hypothesis of convexity in input–output space. This hypothesis is not consistent with standard microeconomic production theory that posits an S-shape for the production frontier, i.e. for production technologies that obey the Regular Ultra Passum Law. Consequently, measures of technical efficiency assuming convexity are biased downward. In this paper, we provide a more general DEA model that allows the S-shape.

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  • Olesen, Ole B. & Ruggiero, John, 2014. "Maintaining the Regular Ultra Passum Law in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 235(3), pages 798-809.
    • Handle: RePEc:eee:ejores:v:235:y:2014:i:3:p:798-809
    DOI: 10.1016/j.ejor.2014.01.016
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    4. Jean-Philippe Boussemart & Walter Briec & Raluca Parvulescu & Paola Ravelojaona, 2022. "$\Lambda$-Returns to Scale and Individual Minimum Extrapolation Principle," Papers 2212.04724, arXiv.org, revised Dec 2023.
    5. Monge, Juan F. & Ruiz, José L., 2023. "Setting closer targets based on non-dominated convex combinations of Pareto-efficient units: A bi-level linear programming approach in Data Envelopment Analysis," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1084-1096.
    6. Walter Briec & Kristiaan Kerstens & Ignace Van de Woestyne, 2022. "Nonconvexity in Production and Cost Functions: An Exploratory and Selective Review," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 18, pages 721-754, Springer.
    7. Antonio Peyrache, 2022. "A Homothetic Data Generated Technology," CEPA Working Papers Series WP042022, School of Economics, University of Queensland, Australia.
    8. Ha, Hun Koo & Kaneko, Shinji & Yamamoto, Masashi & Yoshida, Yuichiro & Zhang, Anming, 2017. "On the discrepancy in the social efficiency measures between parametric and non-parametric production technology identification," Journal of Air Transport Management, Elsevier, vol. 58(C), pages 9-14.
    9. An, Qingxian & Zhang, Qiaoyu & Tao, Xiangyang, 2023. "Pay-for-performance incentives in benchmarking with quasi S-shaped technology," Omega, Elsevier, vol. 118(C).

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