Measuring Scale Efficiency from the Translog Multi-Input, Multi-Output Distance Function

Ray (1998) developed measures of input- and output-oriented scale efficiency that can be directly computed from an estimated Translog frontier production function. This note extends the earlier results from Ray (1998) to the multiple-output multiple input case.

Comparing Input- and Output-Oriented Measures of Technical Efficiency to Determine Local Returns to Scale in DEA Models

This paper shows how one can infer the nature of local returns to scale at the input- or output-oriented efficient projection of a technically inefficient input-output bundle, when the input- and output-oriented measures of efficiency differ.

Input Aggregation in Models of Data Envelopment Analysis: A Statistical Test with an Application to Indian Manufacturing

A problem frequently encountered in Data Envelopment Analysis (DEA) is that the total number of inputs and outputs included tend to be too many relative to the sample size. One way to counter this problem is to combine several inputs (or outputs) into (meaningful) aggregate variables reducing thereby the dimension of the input (or output) vector. A direct effect of input aggregation is to reduce the number of constraints. This, in its turn, alters the optimal value of the objective function. In this paper, we show how a statistical test proposed by Banker (1993) may be applied to test the validity of a specific way of aggregating several inputs. An empirical application using data from Indian manufacturing for the year 2002-03 is included as an example of the proposed test.

Input Price Variation Across Locations and a Generalized Measure of Cost Efficiency

We propose a nonparametric model for global cost minimization as a framework for optimal allocation of a firm's output target across multiple locations, taking account of differences in input prices and technologies across locations. This should be useful for firms planning production sites within a country and for foreign direct investment decisions by multi-national firms. Two illustrative examples are included. The first example considers the production location decision of a manufacturing firm across a number of adjacent states of the US. In the other example, we consider the optimal allocation of US and Canadian automobile manufacturers across the two countries.