A comment on multi-stage data envelopment analysis methodology

Coelli introduced a multi-stage (MS-) DEA methodology that represents an interesting alternative for the treatment of slacks remaining after proportional correction in inputs or outputs. By solving a sequence of radial models, one thus arrives at the identification of ‘more representative efficient points’ (in terms of similar input/output mixes). We show that ‘most representative efficient points’ can be found using a direct approach and may differ from those obtained by MS-DEA. Nevertheless, MS-DEA remains very attractive in view of its economic (intrinsic price) legitimation.