Estimation of returns to scale using data envelopment analysis: A comment

Banker introduced the idea that the sum of the intensity variables in the DEA (Activity Analysis) model can be used to identify returns to scale. A counterexample in Chang and Guh shows that Banker's method may fail. This prompted Banker and Thrall to develop an alternative approach to estimate scale efficiency using DEA. Seemingly unaware of the work by Byrnes, Färe and Grosskopf; Färe, Grosskopf and Lovell; and Färe and Grosskopf, etc. on the same topic, their ‘new’ approach is very similar to the methodology originated in these references. The purpose of this comment is to make our method known and to contrast it to the Banker and Thrall approach.