In performance analysis with tools such as data envelopment analysis, calculations of scale properties of the frontier points are studied using both qualitative and quantitative approaches. When the production process is a bit complicated, the calculation needs to be modifed. Most existing...

This paper critically re-examines the concept of returns to scale vis-à-vis economies of scale since the writings of Adam Smith by relating the former to the concept of production unit and the latter to the concept of firm. Though to date some valuable progress has been made exploring the...

This paper provides radial measurements of efficiency for the production process possessing multi-components under different production technologies. Our approach is based on the construction of various empirical production possibility sets. Then we propose a procedure that is unaffected...

This paper critically analyses, in the context of classical and neoclassical perspectives, the concepts of ‘returns to scale’ and ‘economies of scale’ by relating the former to the concept of ‘production unit’ and the latter to the concept of ‘firm’, and concludes that returns to...

Permutation techniques, where one recompute the test statistic over permutations of data, have a long history in statistics and have become increasingly useful as the availability of computational power has increased. Until now, no permutation tests for examining returns to scale assumptions,...

Combining micro and macro data, we construct demand-side shocks, which we take to be exogenous for individual firms. We estimate a reduced-form model to describe how firms adjust their production, employment, capital stock, and inventories in response to such shocks. Then, we chose the...