Business-Economics Building, 203E, University of Texas at Austin, Austin, TX 78712, U.S.A.;University of Miami, Coral Gables, FL 33124, U.S.A.
Abstract:
A new multiplicative efficiency formulation is developed wherein the efficiency values are invariant under changes in the units of measurement of outputs and inputs. It is shown that the associated Data Envelopment Analysis (DEA) implies that optimal envelopments are of piecewise Cobb-Douglas type. This leads to a new method for estimating frontier production functions of Cobb-Douglas type.