International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss


A Note on the Scale Efficiency Test of Simar and Wilson
Hédi Essid, Pierre Ouellette, Stéphane Vigeant

Simar and Wilson (2002) procedure to test for returns to scale has a drawback as it may generates inconsistent values. We use a counter example to show that their returns to scale test procedure generates non admissible pseudo-values. Consequently, the test results are not consistent and cannot be used to test for returns to scale. We propose a remedy that consists in a correction of the simulation algorithm to ensure the consistency of the estimated test statistic.

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