Efficiency in Increasing Returns of Scale Frontier

Abstract

Abstract. The main objective of this paper is to analyze DMUs efficiency from different perspectives of variable returns to scale. For that, the authors use results of CCR, BCC and a new model proposed. The new model presents just in-creasing returns to scale. Thus, the efficient frontier must have specifics characteristics that guarantees increasing additional output beyond additional inputs verified. This study is going to show that the classic model of DEA BCC proposes variable returns of scale, however cannot ensure that all the efficient DMUs with increasing returns to scale is identified. The authors propose a new model where the measurement of efficiency is made by increasing returns to scale frontier.

Scale Efficiency in Tambaqui Farming in Earth Ponds in the Metropolitan Region of Manaus-Am

“…The increasing scale returns found in more than 80% of DMUs are indicative that DMUs are constrained in their production by market, technical or political limitations. As observed in this study and corroborated by Benicio et al (2015), one of the reasons for an increasing return is the inability of DMUs to rationalize fixed costs with the scale of production, which refers to the optimization of the use of fixed capital. Another factor that contributes to an increasing scale returns and evidenced by Benicio et al (2015) is the lack of specialization of DMUs, which generate more than one product and cannot optimize the production factors.…”

“…As observed in this study and corroborated by Benicio et al (2015), one of the reasons for an increasing return is the inability of DMUs to rationalize fixed costs with the scale of production, which refers to the optimization of the use of fixed capital. Another factor that contributes to an increasing scale returns and evidenced by Benicio et al (2015) is the lack of specialization of DMUs, which generate more than one product and cannot optimize the production factors. There was an increase in technical and scale (CRS and VRS) efficiency, as the production scale increased, but only two fish farms (M3 and M4) were efficient due to the lower costs and higher profits, showing that majority do not use the most appropriate technology for the activity and that micro-and small-scale development is also not recommended in the situation in which the activity is being developed (Table 2 and 3).…”

“…The remainder (onethird) of the animals are kept in the earth ponds and fattened for another 180 days, to reach a roelo pattern. Concurrent production practice is an attempt by fish farmers to reduce costs and increase profitability through infrastructure optimization, since some fixed disbursements are diluted when production is increased (Benicio et al, 2015), as well as to supply the market of the industrial center of Manaus which was previously served by fishing. However, with the reduction of fish stocks and the supply of small fish, the demand was met by tambaqui curumim (Gandra, 2010).…”

“…In this context, efficiency is defined as the best possible combination of inputs to generate the maximum output, in other words, the ratio between the production observed and the maximum possible production (Banker, 1984;Coelli, 1996;Gomes et al, 2005). The Data Envelopment Analysis (DEA) is a tool that has been used successfully to determine the efficiency of productive units, allowing to generate a single indicator (efficiency measure), which facilitates the decision-making process regarding the performance of decision-making units analyzed (DMUs) (Charnes et al, 1979;Banker, 1984;Gomes et al, 2005;Alam et al, 2012;Benicio et al, 2015;Sabbag and Costa, 2015). The determination of efficiency through the DEA allows managers to compare productive units among themselves, to evaluate the allocation of available resources for production and to determine the possible production to be reached (Gomes et al, 2005).…”