On the estimation of returns-to-scale in FDH models

This paper first reviews Kerstens and Vanden Eeckaut’s (K&VE) method [Kerstens, K., Vanden Eeckaut, P., 1999. Estimating returns-to-scale using non-parametric deterministic technologies: A new method based on goodness-of-fit. European Journal of Operational Research 113, 206–214] for testing returns-to-scale (RTS) in free disposal hull (FDH) models. Then, an approach and an algorithm are introduced for this task, based on the evaluation of certain ratios of inputs and outputs, which have many computational advantages. Also, the equivalence between the proposed approach and K&VE method is proved.