Introducing microeconomic foundation in DEA: the average-based approach. Issue 2 (2nd April 2020)

• Record Type: Journal Article
• Authors: Ribeiro, Vitor Miguel; Varum, Celeste; Daniel, Ana Dias
• Is Part Of: Spatial economic analysis. Volume 15:Issue 2(2020)
• Page Start: 145
• Page End: 164
• Publication Date: 2020-04-02
• Subjects: data envelopment analysis -- multilevel system -- multi-stage system -- Spence distortion; L51 -- O31 -- R15; Space in economics -- Periodicals; Economic geography -- Periodicals; Space in economics -- Econometric models -- Periodicals; Urbanization -- Periodicals; Espace (Économie politique) -- Périodiques; Économétrie -- Périodiques; Géographie économique -- Périodiques; Économie industrielle -- Périodiques; Économie du travail -- Périodiques; Économie urbaine -- Périodiques; Politique économique -- Périodiques; Relations économiques internationales -- Périodiques; 330.9
• DOI: 10.1080/17421772.2020.1701701
• Languages: English
• ISSNs: 1742-1772

Abstract

ABSTRACT: Although recent developments focused on the multi-stage and multilevel data envelopment analysis (DEA) exhibit a high degree of mathematical sophistication, they are also characterized by the absence of a microeconomic foundation. This study proposes a novel approach called average-based DEA, which is conceived to overcome such a concern through the application of the Spence distortion principle to the hierarchy of a system. Theoretical and empirical results demonstrate that the proposed methodology reduces the distortion of efficiency scores observed in alternative multilevel extensions.