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Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit

Author

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  • Kristiaan Kerstens

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Philippe Vanden Eeckaut

    (RIME-Lab - Recherche Interdisciplinaire en Management et Économie Lab - ULR 7396 - UA - Université d'Artois - Université de Lille)

Abstract

The purpose of this note is to define a new and more general method to obtain qualitative information about returns to scale for individual observations. In a second section the traditional methods developed for estimating returns to scale on nonparametric deterministic reference technologies (Data Envelopment Analysis (DEA) models) are reviewed. Section 3 provides a new and more general method that is suitable for all reference technologies. Its usefulness is illustrated by considering variations on an existing non-convex production model, known as the Free Disposal Hull (FDH). When different returns to scale assumptions are introduced into the FDH, then previous methods for determining returns to scale do no longer apply.
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Suggested Citation

  • Kristiaan Kerstens & Philippe Vanden Eeckaut, 1999. "Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit," Post-Print hal-03526993, HAL.
    • Handle: RePEc:hal:journl:hal-03526993
    DOI: 10.1016/S0377-2217(97)00428-1
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    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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