Negative data in DEA: a simple proportional distance function approach

Negative data in DEA: a simple proportional distance function approach

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Article ID: iaor20114873
Volume: 62
Issue: 7
Start Page Number: 1413
End Page Number: 1419
Publication Date: Jul 2011
Journal: Journal of the Operational Research Society
Authors: ,
Keywords: frontier analysis
Abstract:

The need to adapt Data Envelopment Analysis (DEA) and other frontier models in the context of negative data has been a rather neglected issue in the literature. A recent article in this journal proposed a variation on the directional distance function, a very general distance function that is dual to the profit function, to accommodate the occurrence of negative data. In this contribution, we define and recommend a generalised Farrell proportional distance function that can do the same job and that maintains a proportional interpretation under mild conditions.

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