An input-oriented radial measure for returns to scale aggregation.

Subject Areas : Data Envelopment Analysis

Reza Kazemi Matin ¹ , Roza Aziz ² , Mahdi Mirjaberi ³

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Received: 2017-07-05 Accepted : 2017-08-14 Published : 2018-06-01

Keywords: Target setting, Data Envelopment Analysis (DEA), Industry, Aggregation, Input-oriented radial measure, Returns-to-scale (RTS),

Abstract :

In production theory, it is necessary to be capable of predicting the production func- tion’s long-run behaviors. Hereof, returns to scale is a helpful concept. Returns to scale describes the reaction of a production function to the proportionally scaling all its input variables. In this regard, Data envelopment analysis (DEA) provides a com- prehensive framework for returns to scale evaluation. A sequence of attempts has been made on the subject of returns to scale in DEA literature which cause DEA to be ex- panded to widespread applications. Centralization of carried out studies in firm level, on one hand, and the importance of economical inter-operation in performance analysis in industry level, on the other hand, were the main motivation to start a new range of studies around identifying the return to scale in industry level. This paper collaborates interesting relations between firms and industry technology with performance analysis techniques to extract a relation between returns to scale status of firms and system-wide unit based on the reference set method.

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