An Interpretation Of The Technical Efficiency As The "Best Possible Deviation" From The Conditions Defined By The Weak Axiom Of Profit Maximization

Abstract

This paper provides a characterization of the classical Charnes, Cooper and Rhodes’ (CCR) model in Data Envelopment Analysis (DEA). The characterization is based on the Weak Axiom of Profit Maximization (WAPM) in Firm Theory. Efficiency measures for Decision Making Units (DMUs) provided by the classical CCR-DEA model are derived as measurements of deviations from the conditions prescribed by the Weak Axiom of Profit Maximization (WAPM).