Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 29/2012: Measurement of Returns to Scale Using Non-Radial DEA Models

Vladimir E. Krivonozhko, Finn R. Førsund () and Andrey V. Lychev
Additional contact information
Vladimir E. Krivonozhko: National University of Science and Technology «MISiS», Postal: Moscow
Finn R. Førsund: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Andrey V. Lychev: National University of Science and Technology «MISiS», Postal: Moscow

Abstract: There are some specific features of the non-radial DEA (data envelopment analysis) models which cause some problems under the returns to scale measurement. In the scientific literature on DEA, some methods were suggested to deal with the returns to scale measurement in the non-radial DEA models. These methods are based on using Strong Complementary Slackness Conditions in the optimization theory. However, our investigation and computational experiments show that such methods increase computational complexity significantly and may generate “strange” results. In this paper, we propose and substantiate a direct method for the returns to scale measurement in the non-radial DEA models. Our computational experiments documented that the proposed method works reliably and efficiently on the real-life data sets.

Keywords: Data envelopment analysis; Returns to scale; Non-radial models; Efficiency; Strong Complementary Slackness Conditions

JEL-codes: C44; C61; C67; D24

21 pages, November 7, 2012

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Published as
Vladimir E. Krivonozhko, Finn R. Førsund and Andrey V. Lychev, (2014), 'Measurement of Returns to Scale Using Non-Radial DEA Models', european journal of operational research, vol 232, pages 664-670

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