Podinovski, V. V. and Forsund, F. R.. (2010) Differential characteristics of efficient frontiers in data envelopment analysis. Operations Research, Vol.58 (No.6). pp. 1743-1754. ISSN 0030-364X

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Abstract

The implicit definition and nondifferentiability of efficient frontiers used in data envelopment analysis are two major obstacles to obtaining their differential characteristics, including various elasticity measures and marginal rates of substitution. In this paper we invoke the theorem of the directional derivative of the optimal value function and show how this can be used to define and calculate the required elasticities without any simplifying assumptions. This approach allows us to extend the known elasticity measures and introduce new ones to the entire efficient frontier, including all its extreme points, in one single development. We also construct linear programs that are required for the calculation of elasticity measures. Our main development is undertaken in the variable returns-to-scale technology but extends to other polyhedral technologies of efficiency analysis.

Item Type:	Journal Article
Divisions:	Faculty of Social Sciences > Warwick Business School > Operational Research & Management Sciences Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Operations Research
Publisher:	Institute for Operations Research and the Management Sciences (I N F O R M S)
ISSN:	0030-364X
Date:	2010
Volume:	Vol.58
Number:	No.6
Page Range:	pp. 1743-1754
Identification Number:	10.1287/opre.1090.0794
Status:	Peer Reviewed
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/41872

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