The application of data envelopment analysis (DEA) on measuring the effect of technological innovation on scale-economies of the automobile

The automobile industry is one of the most typical scale-economies industries, and also the most active in technological innovation. Its development is close together with technological innovation, and one of the available ways to realize its scale-economies is technological innovation. We put forward that there are two ways for technological innovation to affect scale-economies. The first is the move of the production frontier caused by the change of technological level, which leads to the change of the possible productive set and scale; the second is the change of the available production frontier (APF) by organization innovation. We put forward data envelopment analysis to measure these changes as above. We select input indexes such as instigators of technological innovation and investment in R&D, and output indexes such as ratio of cost-profit and taxes, and then give a case to demonstrate how to operate the indexes.