Economic interpretations of DEA

Abstract Research on productive efficiency at the firm level has developed as an important and active strand of research the last decades, both within operations research, management science and economics. Two apparently different definitions of efficiency are examined, but it is shown that when both estimation methods are based on solving linear programming problems the definitions of efficiency are identical. The purpose of the paper is to give the basic ideas of efficiency analyses using DEA as a tool for researchers not so familiar with efficiency analysis and DEA. The concept of shadow prices is given special attention.

[1]  A. Charnes,et al.  Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis , 1984 .

[2]  Abraham Charnes,et al.  Measuring the efficiency of decision making units , 1978 .

[3]  M. Farrell.  The Measurement of Productive Efficiency , 1957 .

[4]  F. Førsund.  Dynamic Efficiency Measurement , 2015 .

[5]  V. V. Podinovski,et al.  Suitability and redundancy of non-homogeneous weight restrictions for measuring the relative efficiency in DEA , 2004, Eur. J. Oper. Res..

[6]  William W. Cooper,et al.  Introduction to Data Envelopment Analysis and Its Uses: With Dea-Solver Software and References , 2005 .

[7]  P. Zhou,et al.  On estimating shadow prices of undesirable outputs with efficiency models: A literature review , 2014, Applied Energy.

[8]  R. Shephard.  Cost and production functions , 1953 .

[9]  M. Farrell,et al.  Estimating Efficient Production Functions Under Increasing Returns to Scale , 1962 .

[10]  R. Färe.  Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach , 1993 .

[11]  Finn R. Førsund,et al.  Farrell revisited–Visualizing properties of DEA production frontiers , 2009, J. Oper. Res. Soc..

[12]  R. Shepherd.  Theory of cost and production functions , 1970 .

[13]  Nikias Sarafoglou,et al.  The Tale of Two research Communities: The Diffusion of Research on Productive Efficiency , 2005 .

[14]  F. Førsund.  Weight restrictions in DEA: misplaced emphasis? , 2013 .

[15]  J. N. Boles.  The 1130 Farrell efficiency system-multiple products, multiple factors. , 1971 .

[16]  P. W. Wilson,et al.  Statistical Inference in Nonparametric Frontier Models: The State of the Art , 1999 .

[17]  F. Førsund,et al.  On the Origins of Data Envelopment Analysis , 2000 .