 The transformation function, technical efficiency, and the CCR ratioEuropean Journal of Operational Research, 2019, vol. 278, issue 2, 422-429 Abstract: Charnes, Cooper, and Rhodes define the ratio of the virtual output to the virtual input as a measure of the technical efficiency of a multiple output multiple input firm. The aggregation weights used in construction the virtual output and the virtual input may be arbitrarily chosen so long as the weights are non-negative and using these weights no firm's input-output bundle shows efficiency exceeding 100%. In production economics, the ratio of aggregate output to aggregate input is a measure of total factor productivity and a direct link of the Charnes, Cooper, and Rhodes ratio to technical efficiency is not obvious. Usually the ratio measure is rationalized as efficiency by showing its equivalence to the Farrell efficiency measure. This paper offers a direct derivation of the ratio measure of efficiency from a transformation function. We also show how Banker, Charnes, and Cooper measure under variable returns to scale can be derived from the transformation function. Keywords: Data envelopment analysis; Supporting hyperplane; Convexity; Degree of increasing returns (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:278:y:2019:i:2:p:422-429 DOI: 10.1016/j.ejor.2019.02.014 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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