TESTING FOR INVERSE HOMOTHETICITY: A NONPARAMETRIC APPROACH

Hirofumi Fukuyama () and William L. Weber

The Japanese Economic Review, 2004, vol. 55, issue 4, 460-478

Abstract: The efficiency of a decision‐making unit can be estimated relative to the direct output possibility set or the indirect (cost‐constrained) output possibility set. For the direct and indirect output sets we show that the ratio of two Farrell (radial) efficiency measures equals the ratio of two Zieschang (non‐radial) efficiency measures if and only if the production technology is inverse‐homothetic. A consequence of inverse homotheticity is that the input and output expansion paths are linear.

Date: 2004
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https://doi.org/10.1111/j.1468-5876.2004.00316.x

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