Maintaining the Regular Ultra Passum Law in data envelopment analysis
The variable returns to scale data envelopment analysis (DEA) model is developed with a maintained hypothesis of convexity in input-output space. This hypothesis is not consistent with standard microeconomic production theory that posits an S-shape for the production frontier, i.e. for production technologies that obey the Regular Ultra Passum Law. Consequently, measures of technical efficiency assuming convexity are biased downward. In this paper, we provide a more general DEA model that allows the S-shape.
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LEM Papers Series
2005/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
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