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.
Highlights
China has experienced rapid urbanization since the reform and opening up process began in 1978 [1]
We apply the data envelopment analysis (DEA) game cross-efficiency model presented in the previous sections to analyze the efficiency and the assignment weight of the urban public infrastructure investment
We figure out a Nash equilibrium point and solve the nonunique problem
Summary
China has experienced rapid urbanization since the reform and opening up process began in 1978 [1]. Sun et al [16] used DEA cross-efficiency model to evaluate and analyze the urban infrastructure economic efficiency of 35 Chinese large and medium-sized cities in 2012. There are some researches discussing about efficiency evaluation with the DEA game cross-efficiency model. In order to study the efficiency of infrastructure investment and the fund allocation of Chinese provincial capital cities, we treat the cities as DMUs. As there are competitions existing among the cities, it is rational to use the DEA game cross-efficiency model to evaluate the comprehensive efficiency of each city in urban public infrastructure and allocate funds.
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