An epsilon-based measure of efficiency in DEA

Miki Tsutsui and Kaoru Tone
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Miki Tsutsui: Central Research Institute of Electric Power Industry
Kaoru Tone: National Graduate Institute for Policy Studies

No 09-13, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: Firstly, we discuss differences between Farrell and Pareto-Koopmans efficiency measures in DEA, and propose a composite method for discriminating them. Then, we extend the method to so-called “epsilon based-measure (EBM).” The EBM can examine the robustness and stability of efficiency measure of DMUs regarding parametric change of input multiplier variables. Lastly, we propose a scheme for selecting an appropriate value of epsilon with recourse to actual cost shares of input resources.

Keywords: Farrell efficiency; Pareto-Koopmans efficiency; stability analysis; EBM (search for similar items in EconPapers)
Pages: 25 pages
Date: 2009-09
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ngi:dpaper:09-13

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