Cost Congestion in Data Envelopment Analysis
Keywords:
Cost congestion, cost eciency, production possibility set, decomposition of eciencyAbstract
Abstract. Identifying ineciency factors is crucial for evaluating theperformance of Decision Making Units (DMUs) in Data Envelopment
Analysis (DEA). Among these ineciencies, congestion is particularly
important and should be prioritized for elimination once identied. In
DEA literature, congestion typically refers to a situation where an in-
crease in one or more inputs leads to a decrease in one or more outputs,
or conversely, a decrease in inputs leads to an increase in outputs. This
study extends the traditional notion of congestion by introducing the
concept of cost congestion. Cost congestion occurs when an increase in
expenditures on one or more components of the cost vector results in a
decline in output, or when a reduction in cost components leads to an
increase in output. Furthermore, this study analyzes cost ineciencies
by considering factors such as congestion, technical ineciencies arising
from inputs and input prices, and also provides a decomposition of lost
opportunities attributable to various ineciency sources.
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