Nonparametric estimation of returns to scale: Method and application

The paper describes a method of estimating variable returns to scale in pro duction that adaptively fits spline functions, using model selection criter ia, to determine the appropriate number and location of break points for a fixed factor of production. Unlike other approaches, the method obtains non parametric estimates of variable returns to scale for small samples while e nsuring global curvature and flexibility properties are maintained. An appl ication of the method is presented using data from the British Columbia sab lefish fishery.