STUDY ON INPUT-OUTPUT RELATION WITH CHARACTERISTIC OF INCREASING MARGINAL REVENUE USING DEA MODEL

This paper studies the input-output relation with characteristic of increasing marginal revenue. If traditional DEA model is still used as it is, there will be a fairly large deviation between the front surface of production possibility set determined by the DEA model and the real frontier production function, which makes the results of calculation unreasonable. We discuss the widespread existence of increasing marginal revenue, spell out a kind of method used for identification of increasing marginal revenue, transform the sample set through appropriate mathematic transformation to enable the non-convex real production possibility set to become convex, and on top of this, conduct the evaluation of the relative effectiveness of a unit using traditional DEA models, and solve the real front surface through a mathematic inverse transformation.