China 
Africa 
Explore chapters and articles related to this topic
Airline Cost Classifications
Published in Bijan Vasigh, Ken Fleming, Liam Mackay, Foundations of Airline Finance, 2018
Bijan Vasigh, Ken Fleming, Liam Mackay
A constant variable cost means that the company is achieving constant returns to scale. For every additional input ($100,000) it is receiving one level of output (1,000 aircraft catered). Some companies do not receive constant returns to scale, meaning that they have either increasing returns or decreasing returns to scale. When a company operates with increasing returns to scale, the average cost is decreasing and the company is receiving the benefits of economies of scale. Decreasing returns to scale exhibit the opposite characteristics; that is, marginal cost is increasing and diseconomies of scale occur. Increasing and decreasing returns are depicted in Figure 2.5 through a non-linear total cost curve.
General introduction
Published in Adedeji B. Badiru, Handbook of Industrial and Systems Engineering, 2013
In addition, if a proportionate increase in all inputs results in a less than proportionate increase in output, we say that the production function exhibits decreasing returns to scale (DRS). Alternatively, if increasing all inputs results in the same proportional increase in output, we say that it exhibits constant returns to scale (CRS). Finally, if the increase of all inputs results in a more than proportionate increase in output, we say that the production function exhibits increasing returns to scale (IRS). Table 2.1 shows a mathematical illustration of these three properties where λ>1.
Technology and Growth
Published in Keith Norris, John Vaizey, The Economics of Research and Technology, 2018
A particular form of aggregate production function plays a crucial role in neo-classical economics. This is the form that exhibits constant returns to scale. If a production function has constant returns to scale and if both inputs are simultaneously increased by some proportion then output will increase in the same proportion. If this holds true everywhere the function is linear and homogeneous of degree one. This is important for neoclassical economics because a property of such functions is:
Evaluating the performance of Chinese provincial road safety based on the output–input ratio
Published in Transportation Letters, 2022
According to the formulae (1), there are three possible types of returns to scale: increasing returns to scale, constant returns to scale, and decreasing returns to scale (see Figure 3). The performance score of a DMU varies from 0 to 1. DMUs that lie on the boundary are deemed efficient, i.e. the efficiency of DMUs is 1. Otherwise, DMUs are termed inefficient (Yang 2006). x and y represent the input and output, respectively. Points B and C represent the DMUs. The line segments OP and OQ represent the output score of points B and C, respectively. The line segments OA represent the input score of points B and C. From the output-oriented view, the maximization of output decrease in the same input is required to measure the performance, i.e. point C moves toward point B on the boundary. Point B is on the boundary and its performance is scored 1.0, Point C deviates from the boundary and its performance can be computed as: OP/OQ<1. The output of point C should be reduced by 1-OP/OQ = PQ/OQ to become efficient.
Road safety performance across local governments: a data envelopment analysis approach
Published in International Journal of Injury Control and Safety Promotion, 2020
Justin S. Chang, Sangjin Han, Sihwan Jo
First, the identification of frontiers leads to two basic models in DEA. The first model assumes constant returns to scale technology (CRS model). This is appropriate when all DMUs are operating at an optimal scale, which is unrealistic in road safety. To operate at an optimal scale, DMUs should evolve in a perfectly competitive environment, which is seldom the case to local governments. The second model assumes variable returns to scale technology (VRS model). This is appropriate when DMUs are not operating at an optimal scale. This is usually the case when DMUs face imperfect competition, regulations, etc., as local governments generally encounter in road safety practices. Thus, this paper adopts the VRS model. The returns to scale can be increasing or decreasing. DMUs that face increasing returns to scale (IRS) do not reach their optimal sizes. Hence, their productivity increases with the size. In contrast, DMUs associated with decreasing returns to scale (DRS) face diseconomies of scale. That is, they have already exceeded optimal sizes. Thus, their productivity decreases with the size.
Assessing the efficiency of integrated public transit stations based on the concept of transit-oriented development
Published in Transportmetrica A: Transport Science, 2020
Reuben Tamakloe, Jungyeol Hong
Researchers have widely used the CCR-DEA model under the CRS assumption. It assumes that an increase in a unit’s input leads to an equal proportional increase in its outputs. It means that the efficiency of a unit will remain the same regardless of the scale at which it operates (C.P. Barros and Assaf 2009). Nevertheless, in the domain of transit systems, the BCC–DEA model introduced by Banker, Charnes, and Cooper (1984), which assumes variable returns to scale (VRS), is more suitable since it presents either increasing or decreasing returns to scale. For increasing returns to scale, an increase in a unit’s input leads to a greater than proportionate increase in its outputs, and in a decreasing return to scale model, a decrease in units’ inputs results in a lower than proportionate increase in its outputs. Using VRS permits modelling of the entire range of inputs, and since there is a vast difference in inputs across transit stations, it shows to be more superior.