Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 90: Alternative Approaches to Estimate Returns to Scale in DEA- Models

Mickael Löthgren () and Magnus Tambour ()
Additional contact information
Mickael Löthgren: Department of Economic Statistics, Postal: Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Magnus Tambour: Centre for Health Economics, Postal: Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden.

Abstract: This paper presents a number of approaches to estimate returns to scale properties of general multiple-input muliple-output technologies. Both qualitative scale efficiency-properties and quantitative scale elasticity-properties are covered. The estimation approaches considered are based on data envelopment analysis (DEA)-models using primal production data on inputs and outputs. We propose an approach to estimate scale elasticity based on the primal efficiency problem. This alternative approach is derived as a direct approximation of the differentials of the efficiency measures in the scale elasticity definition. The different approaches to estimate scale efficiency and scale elasticity are exemplified and compared using a small dataset.

Keywords: Data envelopment analysis; scale efficiency; scale elasticity; dual linear programming

JEL-codes: D24

23 pages, January 1996

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