Marginal Values and Returns to Scale for Nonparametric Production Frontiers

We present a unifying linear programming approach to the calculation of various directional derivatives for a very large class of production frontiers of data envelopment analysis (DEA). Special cases of this include different marginal rates, the scale elasticity, and a spectrum of partial and mixed elasticity measures. Our development applies to any polyhedral production technology including, to name a few, the conventional variable and constant returns-to-scale DEA technologies, their extensions with weight restrictions, technologies with weakly disposable undesirable outputs, and network DEA models. Furthermore, our development provides a general method for characterization of returns to scale (RTS) in any polyhedral technology. The new approach effectively removes the need to develop bespoke models for the RTS characterization and calculation of marginal rates and elasticity measures for each particular technology.

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