On Estimating Optimal a-Returns to Scale

Jean-Philippe Boussemart, Walter Briec, Hervé Leleu and Paola Ravelojaona
Additional contact information
Walter Briec: University of Perpignan
Paola Ravelojaona: University of Perpignan

No 2016-EQM-01, Working Papers from IESEG School of Management

Abstract: From a theoretical point of view, a-returns to scale is a relevant alternative to traditional Data Envelopment Analysis models for estimating production technologies under global returns to scale assumptions such as strictly increasing or strictly decreasing returns to scale. However, from a methodological and empirical point of view, the estimation of a remains a question that must be answered. This paper proposes an effective methodology to estimate an optimal value of a based upon a goodness-of-fit strategy. A global method using a grid-search is presented first. In addition, for generalized Free Disposal Hull technologies, a minimum extrapolation principle is developed to estimate directly the optimal a-returns from a linear program. This study examined 63 US industries over the period 1987-2012 to demonstrate the relevancy of our approach.

Keywords: a-Returns to Scale; Data Envelopment Analysis; Increasing Returns (search for similar items in EconPapers)
JEL-codes: D24 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2016-02
New Economics Papers: this item is included in nep-eff
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Related works:
Journal Article: On estimating optimal α-returns to scale (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:e201601

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