Transconcave Data Envelopment Analysis

Transconcave data envelopment analysis (TDEA) extends standard data envelopment analysis (DEA), in order to account for non-convex production technologies, such as those involving increasing returns-to-scale or diseconomies of scope. TDEA introduces non-convexities by transforming the range and the domain of the production frontier, thus replacing the standard assumption that the production frontier is concave with the more general assumption that the frontier is concave transformable. TDEA gives statistically consistent estimates for all monotonically increasing and concave transformable frontiers. In addition, Monte Carlo simulations suggest that TDEA can substantially improve inefficiency estimation in small samples compared to the standard Banker, Charnes and Cooper model and the full disposable hull model (FDH).