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Terminal units in DEA: Definition and Determination


  • Krivonozhko, Vladimir

    (Institute for Systems Analysis, Russian Academy of Sciences, Moscow)

  • R. Førsund, Finn

    () (Dept. of Economics, University of Oslo)

  • V. Lychev, Andrey

    (Accounts Chamber of the Russian Federation, Moscow)


Applications of the DEA models show that inadequate results may arise in some cases, two of these inadequacies being: a) too many efficient units may appear in some DEA models; b) a DEA model may show an inefficient unit from the point of view of experts as an efficient one. The purpose of this paper is to identify units that may unduly become efficient. The concept of a terminal unit is introduced for such units. A method for improving the adequacy of DEA models based on terminal units is suggested, and an example shown based on a real-life data set for Russian banks.

Suggested Citation

  • Krivonozhko, Vladimir & R. Førsund, Finn & V. Lychev, Andrey, 2011. "Terminal units in DEA: Definition and Determination," Memorandum 04/2011, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2011_004

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    References listed on IDEAS

    1. Førsund, Finn R. & Kittelsen, Sverre A. & Krivonozhko, Vladimir E., 2007. "Farrell Revisited: Visualising the DEA Production Frontier," Memorandum 15/2007, Oslo University, Department of Economics.
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    More about this item


    Terminal units; DEA; Efficiency; Weight restrictions; Domination cones;

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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