Calculation of scale elasticities in DEA models: direct and indirect approaches.

Førsund, Finn R.; Hjalmarsson, Lennart; Krivonozhko, Vladimir E.; Utkin, Oleg B.

The qualitative characterisation of returns to scale in DEA has been a research issue the last decade. However, quantitative information provides the ultimate information. This paper presents two ways of obtaining numerical values of scale elasticity by an indirect approach using efficiency scores and dual variables for radial projections of inefficient points to the frontier, and a direct approach that is more general and powerful and directly evaluates numerically scale elasticity at any point on the DEA surface along intersections with planes. The direct and indirect approaches are compared using real data and a very high correspondence is found.

DATA envelopment analysis; LINEAR programming; MATHEMATICAL programming; ALGORITHMS; MATHEMATICAL optimization; MATHEMATICAL analysis; ELASTICITY; MATHEMATICAL physics; ELECTRIC utilities

Journal of Productivity Analysis, 2007, Vol 28, Issue 1/2, p45

0895-562X

Academic Journal

10.1007/s11123-007-0047-5