Asmild, Mette3; Hougaard, Jens Leth3; Olesen, Ole Bent2
1 Section for Production, Markets and Policy, Department of Food and Resource Economics, Faculty of Science, Københavns Universitet2 Institut for Virksomhedsledelse og Økonomi3 Section for Production, Markets and Policy, Department of Food and Resource Economics, Faculty of Science, Københavns Universitet
This paper proposes a test for whether data are over-represented in a given production zone, i.e. a subset of a production possibility set which has been estimated using the non-parametric Data Envelopment Analysis (DEA) approach. A binomial test is used that relates the number of observations inside such a zone to a discrete probability weighted relative volume of that zone. A Monte Carlo simulation illustrates the performance of the proposed test statistic and provides good estimation of both facet probabilities and the assumed common inefficiency distribution in a three dimensional input space. Potential applications include tests for whether benchmark units dominate more (or less) observations than expected.
European Journal of Operational Research, 2013, Vol 230, Issue 1, p. 88-96