Technical Efficiency Measures on DEA and FDH: A Reconsideration of the Axiomatic Literature

The aim of this paper is to evaluate both radial and nonradial measures of technical efficiency based on two popular non-parametric reference technologies, known as Data Envelopment Analysis (DEA) and the Free Disposal Hull (FDH). In addition to the traditional radial measurement, a series of alternative technical efficiency measures proposed in the theoretical literature are presented and discussed. In particular, the axioms satisfied by these efficiency measures are summarized and some of these properties are illustrated using numerical examples. Another property is proposed guaranteeing the insensitivity of the efficiency measure ,to the number of dimensions in the analysis. The latter is especially important in applied work. Furthermore, additional arguments on e.g., the cost interpretation of these efficiency measures are examined.