CCR or BCC: what if we are in the wrong model?

Andreas Dellnitz (), Andreas Kleine and Wilhelm Rödder
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Andreas Dellnitz: FernUniversität in Hagen (University of Hagen)
Andreas Kleine: FernUniversität in Hagen (University of Hagen)
Wilhelm Rödder: FernUniversität in Hagen (University of Hagen)

Journal of Business Economics, 2018, vol. 88, issue 7, No 2, 850 pages

Abstract: Abstract The CCR model by Charnes et al. (Eur J Oper Res 2:429–444, 1978) together with the BCC model by Banker et al. (Manag Sci 30:1078–1091, 1984) are the most popular approaches of measuring efficiency among a group of decision making units, DMUs, in data envelopment analysis, DEA. The right choice of a DEA model—CCR or BCC—often, if not always, is a difficult decision. To evaluate a DMU’s efficiency for both models might be helpful, but it does not always capture the essential issues at stake. In this paper we propose a comparative analysis of both concepts: How does activity scaling under constant BCC-efficiency influence CCR-efficiency. And inversely, how does BCC-efficiency behave when activity scaling under constant CCR-efficiency is applied. Such findings of mutual effects improve a DMU’s ability to reassess upsizing and downsizing of activities. Moreover, it allows for exact calculations of the resulting economic effects, and these effects give new insights beyond classical DEA. Finally, scale efficiency turns out to be the ideal concept to control these activity changes, rather than just CCR- or BCC-efficiency. We use a little numerical example to emphasize advantages of the new concept and sketch the new findings for a theater scenery.

Keywords: Data envelopment analysis; Returns to scale; Scaling of activities; Stability ranges; Scale efficiency (search for similar items in EconPapers)
JEL-codes: C67 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11573-018-0906-8

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