Homothetic Data Generated Production Metatechnologies

Antonio Peyrache ()
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Antonio Peyrache: School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia

No WP022024, CEPA Working Papers Series from University of Queensland, School of Economics

Abstract: This study tackles the problem of building nonparametric production technologies that satisfy homotheticity and (Hicks) neutrality. Since no current method is available, the paper proposes a method for constructing a homothetic metatechnology and proves that this metatechnology can be obtained as the union of homothetic group technologies that satisfy (Hicks) neutrality. It is shown that all these technologies are the minimal technologies that will satisfy the given set of axioms, therefore providing an axiomatic foundation for the method. There is a non-negligible computational aspect in the fact that all technologies are not only LP computable but are in fact computable as a linear function of the size of the dataset (in fact in the non-convex case enumeration algorithms can be used). An empirical illustration is provided to show the strength and range of applicability of the method.

Keywords: Data Envelopment Analysis; Free Disposal Hull; Input Homotheticity; Hicks Neutrality; Efficiency (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uqcepa:194

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