DEA cross-efficiency evaluation under variable returns to scale

Sungmook Lim and Joe Zhu
Additional contact information
Sungmook Lim: Dongguk Business School, Dongguk University, Seoul, South Korea
Joe Zhu: Dongguk Business School, Dongguk University, Seoul, South Korea

Journal of the Operational Research Society, 2015, vol. 66, issue 3, 476-487

Abstract: Cross-efficiency evaluation in data envelopment analysis (DEA) has been developed under the assumption of constant returns to scale (CRS), and no valid attempts have been made to apply the cross-efficiency concept to the variable returns to scale (VRS) condition. This is due to the fact that negative VRS cross-efficiency arises for some decision-making units (DMUs). Since there exist many instances that require the use of the VRS DEA model, it is imperative to develop cross-efficiency measures under VRS. We show that negative VRS cross-efficiency is related to free production of outputs. We offer a geometric interpretation of the relationship between the CRS and VRS DEA models. We show that each DMU, via solving the VRS model, seeks an optimal bundle of weights with which its CRS-efficiency score, measured under a translated Cartesian coordinate system, is maximized. We propose that VRS cross-efficiency evaluation should be done via a series of CRS models under translated Cartesian coordinate systems. The current study offers a valid cross-efficiency approach under the assumption of VRS—one of the most common assumptions in performance evaluation done by DEA.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://www.palgrave-journals.com/jors/journal/v66/n3/pdf/jors201413a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jors/journal/v66/n3/full/jors201413a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorsoc:v:66:y:2015:i:3:p:476-487

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/41274

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald and Jonathan Crook

More articles in Journal of the Operational Research Society from Palgrave Macmillan, The OR Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().