Reformulations of input-output oriented DEA tests with diversification

Abstract

We deal with diversification-consistent data envelopment analysis (DEA) tests suitable for accessing financial efficiency of investment opportunities. We show that under nonnegative inputs and outputs, input-output oriented tests with variable return to scale introduced by Branda (2013) are equivalent to input oriented tests with nonincreasing return to scale proposed by Lamb and Tee (2012).

Moreover, we derive a linear programming formulation of the tests with CVaR deviations.

Keywords

• Data envelopment analysis
• Diversification
• Input-output oriented tests
• Convex reformulation
• CVaR deviations