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Stochastic efficiency measurement: The curse of theoretical consistency

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Author Info
Johannes Sauer (Royal Veterinary and Agricultural University, Copenhagen (KVL))
Klaus Frohberg (Center for Development Research, University of Bonn)
Henrich Hockmann (Institute for Agricultural Development in Central and Eastern Europe, Halle)

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Abstract

The availability of efficiency estimation software – freely distributed via the internet and relatively easy to use – recently inflated the number of corresponding applications. The resulting efficiency estimates are used without a critical assessment with respect to the literature on theoretical consistency, flexibility and the choice of the appropriate functional form. The robustness of policy suggestions based on inferences from efficiency measures nevertheless crucially depends on theoretically well-founded estimates. This paper adresses stochastic efficiency measurement by critically reviewing the theoretical consistency of recently published technical efficiency estimates. The results confirm the need for a posteriori checking the regularity of the estimated frontier by the researcher and, if necessary, the a priori imposition of the theoretical requirements.

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Publisher Info
Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): IX (2006)
Issue (Month): (May)
Pages: 139-166
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Handle: RePEc:cem:jaecon:v:9:y:2006:n:1:p:139-166

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Related research
Keywords: functional form; stochastic efficiency analysis; theoretical consistency;

Find related papers by JEL classification:
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Holger Seebens & Johannes Sauer, 2007. "Bargaining power and efficiency-rural households in Ethiopia," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(7), pages 895-918. [Downloadable!]
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