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Convexity, Disposability and Returns to Scale in Production Analysis

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Abstract

Adequate modelling of undesirable outputs is a key aspect for any performance analysis of economic systems. A nonparametric approach assuming jointly weak disposability of desirable and undesirable outputs inspired by Shephard (1974) has gained substantial popularity in addressing this issue. Recently, researchers were offered an alternative that is to use multiple scaling factors (rather than a single one as in the Shephard’s (1974) approach) when imposing weak disposability in practice. In this paper we discover new properties and relationships between the two approaches, which in turn sheds some new light on the problem and offers reconciling solutions.

Suggested Citation

  • Manh D. Pham & Valentin Zelenyuk, 2017. "Convexity, Disposability and Returns to Scale in Production Analysis," CEPA Working Papers Series WP042017, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uqcepa:121
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    File URL: https://economics.uq.edu.au/files/5028/WP042017.pdf
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    Cited by:

    1. Robin C. Sickles & Wonho Song & Valentin Zelenyuk, 2018. "Econometric Analysis of Productivity: Theory and Implementation in R," CEPA Working Papers Series WP082018, School of Economics, University of Queensland, Australia.

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    More about this item

    Keywords

    Data envelopment analysis; Nonparametric productivity analysis; Weak disposability; Undesirable outputs; Environmental performance;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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