Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit

Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit

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Article ID: iaor20001876
Country: Netherlands
Volume: 113
Issue: 1
Start Page Number: 206
End Page Number: 214
Publication Date: Feb 1999
Journal: European Journal of Operational Research
Authors: ,
Abstract:

The purpose of this note is to define a new and more general method to obtain qualitative information about returns to scale for individual observations. The traditional methods developed for estimating returns to scale on non-parametric deterministic reference technologies (Data Envelopment Analysis models) are reviewed. A new and more general method that is suitable for all reference technologies is provided. Its usefulness is illustrated by considering variations on an existing non-convex production model, known as the Free Disposal Hull (FDH). When different returns to scale assumptions are introduced into the FDH, previous methods for determining returns to scale no longer apply.

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