Measuring Efficiencies and Returns to Scale of Nippon Telegraph & Telephone in Production and Cost Analyses

This article provides a theoretical framework related to Data Envelopment Analysis (DEA) in which an analytical relationship among eight different efficiency concepts is defined and explored in terms of production and cost analyses. This article extends the theoretical basis into the measurement of Scale Economies (SE) and Returns to Scale (RTS). A unique feature of the SE/RTS measurement is that the proposed approach is based upon the measurement regarding not only production activity but also cost performance. As an important case study, this article applies the DEA-based approach to measure the eight efficiency concepts and SE/RTS of Nippon Telegraph & Telephone (NTT). This study finds that NTT has maintained high SE and increasing RTS in the operations of 39 annual periods from 1953 through 1992.