Families of Linear Efficiency Programs based on Debreu's Loss Function

Abstract

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.