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Nonparametric Analysis of Technology and Productivity under Non-Convexity

  • Chavas, Jean-Paul
  • Kim, Kwansoo

This paper investigates the nonparametric analysis of technology under non-convexity. The analysis extends two approaches now commonly used in efficiency and productivity analysis: Data Envelopment Analysis (DEA) where convexity is imposed; and Free Disposal Hull (FDH) models. We argue that, while the FDH model allows for non-convexity, its representation of non-convexity is too extreme. We propose a new nonparametric model that relies on a neighborhood-based technology assessment which allows for less extreme forms of non-convexity. The distinctive feature of our approach is that it allows for non-convexity to arise in any part of the feasible set. We show how it can be implemented empirically by solving simple linear programming problems. And we illustrate the usefulness of the approach in an empirical application to the analysis of technical and scale efficiency on Korean farms.

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File URL: http://purl.umn.edu/149684
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Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149684.

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Date of creation: 2013
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Handle: RePEc:ags:aaea13:149684
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  1. Leleu, Herve, 2006. "A linear programming framework for free disposal hull technologies and cost functions: Primal and dual models," European Journal of Operational Research, Elsevier, vol. 168(2), pages 340-344, January.
  2. Leopold Simar & Valentin Zelenyuk, 2008. "Stochastic FDH/DEA estimators for Frontier Analysis," Discussion Papers 8, Kyiv School of Economics.
  3. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
  4. AGRELL, Per J. & BOGETOFT, Peter & BROCK, Michael & TIND, Jorgen, . "Efficiency evaluation with convex pairs," CORE Discussion Papers RP -1828, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Kristof De Witte & Rui C. Marcques, 2008. "Big and beautiful? On non-parametrically measuring scale economies in non-convex technologies," Center for Economic Studies - Discussion papers ces0822, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  6. Peter Bogetoft & Joseph M. Tama & Jørgen Tind, 2000. "Convex Input and Output Projections of Nonconvex Production Possibility Sets," Management Science, INFORMS, vol. 46(6), pages 858-869, June.
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