A GOAL PROGRAMMING-DISCRIMINANT FUNCTION-APPROACH TO THE ESTIMATION OF AN EMPIRICAL PRODUCTION FUNCTION-BASED ON DEA RESULTS

This paper describes a new frontier estimation procedure which relies on results obtained from Data Envelopment Analysis (DEA). The paper re views some of the earlier works in this area and points out potential difficulties with them. It further suggests ways to validate such deve lopments. A procedure is constructed on the basis of a Goal Programmin g (GP)-Discriminant Function model developed in stages during the 1980 s. A numerical example is used to illustrate the proposed procedure. T hen, an extensive simulation in which the GP-based procedure is compar ed to three regression-based techniques is presented. The simulation r esults clearly indicate the superiority of the proposed technique over the regression alternatives.