DEA Game Cross-Efficiency Model to Urban Public Infrastructure Investment Comprehensive Efficiency of China

Abstract

In managerial application, data envelopment analysis (DEA) is used by numerous studies to evaluate performances and solve the allocation problem. As the problem of infrastructure investment becomes more and more important in Chinese cities, it is of vital necessity to evaluate the investment efficiency and assign the fund. In practice, there are competitions among cities due to the scarcity of investment funds. However, the traditional DEA model is a pure self-evaluation model without considering the impacts of the other decision-making units (DMUs). Even though using the cross-efficiency model can figure out the best multiplier bundle for the unit and other DMUs, the solution is not unique. Therefore, this paper introduces the game theory into DEA cross-efficiency model to evaluate the infrastructure investment efficiency when cities compete with each other. In this paper, we analyze the case involving 30 provincial capital cities of China. And the result shows that the approach can accomplish a unique and efficient solution for each city (DMU) after the investment fund is allocated as an input variable.