Including substitution of inputs in DEA models
Classic DEA models (e.g., CCR or super-efficiency DEA) assume that inputs are complementary and there is no substitution of inputs. The lack of substitution is a result of using the same input multiplier for all inputs. The author indicates that there is a possibility of including the substitution of inputs by using individual multiplier for each input. This is a characteristic of so-called non-radial DEA, which was proposed by Dyson and Thanassoulis (1992). The author presents some simple measures of substitution which are based on individual multipliers of inputs: substitution range, substitution index, substitution intensity. The substitution index describes what change of initial structure of inputs is needed to reach the optimal technology. The substitution intensity describes the velocity of necessary decrease of one input induced by an increase or not as fast as expected a decrease of the second input. Another characteristic of substitution is a substitution line the estimation of which is also proposed by the author.
Volume (Year): 3-4 (2007)
Issue (Month): ()
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