1 Cannot be more efficient than the Pareto efficiency? Lifen Wu Centre for Efficiency and Productivity Analysis The University of Queensland Australia Philadelphia, July 10 – 12, 2009

2 DEA calculations are Pareto optimal

3 DEA efficient conditions are those of Pareto efficiency

4 Technical and scale efficiencies

5 VRS model with Mixed-Orientation

6 Projection to be scale efficient

7 Tim Coelli’s example of 3 inputs and 1 output

8 Maximizing sum of slacks derived from strict positivity via non-Archimedean constant (BCC models)

9 Maximizing sum of slacks derived from strict positivity via non-Archimedean constant (CCR models)

10 Origin of Strict Positivity (1979)

11 Expression (2) in “Measuring the efficiency of decision making units” (1978)

12 DMU0 may not satisfy the 2 nd condition

13 Strict positivity results in redundant constraint

14 … or makes original CCR model oriented

15 Charnes and Cooper aware of this

16 Proposed condition 2 of Pareto-efficiency Zero is the only possible solution for all the slack variables in envelopment form

17 Conclusion DEA calculations can be more optimal (efficient) than the Pareto optimality (efficiency)

18 Pareto efficiency and inequality