DEA and Intensity Variables

Rolf Färe, Shawna Grosskopf and Dimitris Margaritis

Chapter 3 in Advances in Data Envelopment Analysis, 2015, pp 37-52 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The intensity variables in DEA originally were restricted to be nonnegative, and the focus was on their role in constructing the technology and identifying peer DMUs. It was known that the resulting technology satisfied constant returns to scale. Interestingly, in much earlier work using linear programming models of technology, Sydney Afriat (1972) showed that by restricting the intensity variables to sum to one (as well as nonnegative), variable returns to scale (VRS) could be modeled. Similarly, technology could be restricted to exhibit nonincreasing returns to scale by restricting the sum of the intensity variables to be less than or equal to one. Färe, Grosskopf and Logan (1983) used the nested nature of these restrictions to analyze returns to scale in DEA. The more familiar Banker, Charnes and Cooper (1984) (BCC) model followed in 1984…

Keywords: Optimization Techniques; Multifactor Productivity; Intertemporal Firm Choice; Technological Change: Choices and Consequences; Diffusion Processes; Data Envelopment Analysis; Operations Research (search for similar items in EconPapers)
Date: 2015
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