Estimating Returns to Scale and Scale Efficiency for Energy Consuming Appliances

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Energy consuming appliances accounted for over 40% of the energy use and $17 billion in sales in the U.S. in 2014. Whether such amounts of money and energy were optimally combined to produce household energy services is not straightforwardly determined. The efficient allocation of capital and energy to provide an energy service has been previously approached, and solved with Data Envelopment Analysis (DEA) under constant returns to scale. That approach, however, lacks the scale dimension of the problem and may restrict the economic efficient models of an appliance available in the market when constant returns to scale does not hold. We expand on that approach to estimate returns to scale for energy using appliances. We further calculate DEA scale efficiency scores for the technically efficient models that comprise the economic efficient frontier of the energy service delivered, under different assumptions of returns to scale. We then apply this approach to evaluate dishwashers available in the market in the U.S. Our results show that (a) for the case of dishwashers scale matters, and (b) the dishwashing energy service is delivered under non-decreasing returns to scale. The results further demonstrate that this method contributes to increase consumers’ choice of appliances.

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