The Mathematical Programming Approach To Efficiency Analysis
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Abstract
Abstract In his classic paper, M. J. Farrell (1957) argues that the measurement of productive efficiency is of theoretical and practical importance; a satisfactory efficiency measure allows both empirical testing of theoretical arguments and economic planning to im prove the productivity of particular industries. Farrell ‘s approach, largely inspired by Koopmans (1951), was based on a production possibility set consisting of the conical hull of input-output vectors. This framework was generalized to multiple outputs and reformulated as a mathematical programming problem by Charnes, Cooper, and Rhodes (1978, 1979, 1981) thus initiating the mathematical programming approach to efficiency measurement known as data envelopment analysis (DEA).