Families of linear efficiency programs based on Debreu’s loss function
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- Pastor, J.T., Lovell, C.A.K. & Aparicio, J. J Prod Anal (2012) 38: 109. doi:10.1007/s11123-011-0216-4
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Gerard Debreu introduced a well known radial efficiency measure which he called a “coefficient of resource utilization.” He derived this scalar from a much less well known “dead loss” function that characterizes the monetary value sacrificed to inefficiency, and which is to be minimized subject to a normalization condition. We use Debreu’s loss function, together with a variety of normalization conditions, to generate several popular families of linear efficiency programs. Our methodology also can be employed to generate entirely new families of linear efficiency programs.