PIECEWISE LOGLINEAR ESTIMATION OF EFFICIENT PRODUCTION SURFACES

Linear programming formulations for piecewise loglinear estimation of efficient production surfaces are derived from a set of basic properties postulated for the underlying production possibility sets. Unlike the piecewise linear model of R. D. Banker, A. Charnes, and W. W. Cooper, this approach permits the identification of increasing marginal products, and estimation of the classical S-shaped production functions. Methods are also provided for estimating technical inefficiencies and other production characteristics, such as rates of substitution and transformation, marginal products, returns to scale and most productive scale sizes on the basis of observed production data.