Strong, weak and Farrell efficient frontiers of technologies satisfying different production assumptions

Mahmood Mehdiloo and Victor V. Podinovski

European Journal of Operational Research, 2021, vol. 294, issue 1, 295-311

Abstract: The literature on data envelopment analysis (DEA) and, more broadly, production theory employs different notions of efficiency for the characterization of boundary points of production technologies. These include the strong and weak (Pareto) efficiency, and the Farrell input and output efficiency. For the conventional constant and variable returns-to-scale technologies, the relationship between the different notions of efficiency has been explored in the literature and is well understood now. In this paper we show that, in the general case, which includes many recently developed technologies, the conventional relationship between the different notions of efficiency is no longer valid. We show that such relationship depends on the properties of a particular technology such as convexity, disposability and returns-to-scale characteristics. Our results are applicable to many new technologies for which the different notions of efficiency and methods of their testing have not been fully explored.

Keywords: Data envelopment analysis; Production technology; Efficient frontiers; Weak disposability; Convex technology (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:294:y:2021:i:1:p:295-311

DOI: 10.1016/j.ejor.2021.01.022

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