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Procedures for ranking technical and cost efficient units: With a focus on nonconvexity

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  • Kerstens, Kristiaan
  • Sadeghi, Jafar
  • Toloo, Mehdi
  • Van de Woestyne, Ignace

Abstract

This contribution extends the literature on super-efficiency by focusing on ranking cost-efficient observations. To the best of our knowledge, the focus has always been on technical super-efficiency and this focus on ranking cost-efficient observations may well open up a new topic. Furthermore, since the convexity axiom has both an impact on technical and cost efficiency, we pay a particular attention to the effect of nonconvexity on both super-efficiency notions. Apart from a numerical example, we use a secondary data set guaranteeing replication to illustrate these efficiency and super-efficiency concepts. Two empirical conclusions emerge. First, the cost super-efficiency notion ranks differently from the technical super-efficiency concept. Second, both cost and technical super-efficiency notions rank differently under convex and nonconvex technologies.

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  • Kerstens, Kristiaan & Sadeghi, Jafar & Toloo, Mehdi & Van de Woestyne, Ignace, 2022. "Procedures for ranking technical and cost efficient units: With a focus on nonconvexity," European Journal of Operational Research, Elsevier, vol. 300(1), pages 269-281.
    • Handle: RePEc:eee:ejores:v:300:y:2022:i:1:p:269-281
    DOI: 10.1016/j.ejor.2021.10.023
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