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Stochastic frontier models with random coefficients

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Author Info
Efthymios G. Tsionas (Department of Economics, Athens University of Economics and Business, 104 34 Athens, Greece)
Abstract

The paper proposes a stochastic frontier model with random coefficients to separate technical inefficiency from technological differences across firms, and free the frontier model from the restrictive assumption that all firms must share exactly the same technological possibilities. Inference procedures for the new model are developed based on Bayesian techniques, and computations are performed using Gibbs sampling with data augmentation to allow finite-sample inference for underlying parameters and latent efficiencies. An empirical example illustrates the procedure. Copyright © 2002 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 17 (2002)
Issue (Month): 2 ()
Pages: 127-147
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:jae:japmet:v:17:y:2002:i:2:p:127-147

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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.:
  1. Kalirajan, K P & Shand, R T, 1999. " Frontier Production Functions and Technical Efficiency Measures," Journal of Economic Surveys, Blackwell Publishing, vol. 13(2), pages 149-72, April. [Downloadable!] (restricted)
  2. Gary Koop & M. F. J. Steel, 2004. "Bayesian Analysis of Stochastic Frontier Models," ESE Discussion Papers 19, Edinburgh School of Economics, University of Edinburgh.
  3. van den Broeck, Julien & Koop, Gary & Osiewalski, Jacek & Steel, Mark F. J., 1994. "Stochastic frontier models : A Bayesian perspective," Journal of Econometrics, Elsevier, vol. 61(2), pages 273-303, April. [Downloadable!] (restricted)
  4. Caudill, Steven B & Ford, Jon M & Gropper, Daniel M, 1995. "Frontier Estimation and Firm-Specific Inefficiency Measures in the Presence of Heteroscedasticity," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 105-11, January.
  5. Bauer, Paul W., 1990. "Recent developments in the econometric estimation of frontiers," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 39-56. [Downloadable!] (restricted)
  6. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June. [Downloadable!] (restricted)
  7. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
  8. Kalirajan, K P & Obwona, M B, 1994. "Frontier Production Function: The Stochastic Coefficients Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 87-96, February.
  9. Koop, Gary & Osiewalski, Jacek & Steel, Mark F. J., 1997. "Bayesian efficiency analysis through individual effects: Hospital cost frontiers," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 77-105. [Downloadable!] (restricted)
  10. Swamy, P A V B & Tavlas, George S, 1995. " Random Coefficient Models: Theory and Applications," Journal of Economic Surveys, Blackwell Publishing, vol. 9(2), pages 165-96, June.
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  11. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163. [Downloadable!] (restricted)
  12. John F. Geweke, 1996. "Simulation-based Bayesian inference for economic time series," Working Papers 570, Federal Reserve Bank of Minneapolis. [Downloadable!]
  13. Caudill, Steven B. & Ford, Jon M., 1993. "Biases in frontier estimation due to heteroscedasticity," Economics Letters, Elsevier, vol. 41(1), pages 17-20. [Downloadable!] (restricted)
  14. Swamy, P A V B, 1970. "Efficient Inference in a Random Coefficient Regression Model," Econometrica, Econometric Society, vol. 38(2), pages 311-23, March. [Downloadable!] (restricted)
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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. Goto, Mika & Makhija, Anil K., 2007. "The Impact of Competition and Corporate Structure on Productive Efficiency: The Case of the U.S. Electric Utility Industry, 1990-2004," Working Paper Series 2007-10, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
  2. Efthymios G. Tsionas, 2006. "Inference in dynamic stochastic frontier models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(5), pages 669-676. [Downloadable!]
  3. Alexandra Schmidt & Ajax Moreira & Steven Helfand & Thais Fonseca, 2009. "Spatial stochastic frontier models: accounting for unobserved local determinants of inefficiency," Journal of Productivity Analysis, Springer, vol. 31(2), pages 101-112, April. [Downloadable!] (restricted)
  4. Jim Griffin & Mark Steel, 2005. "Bayesian Stochastic Frontier Analysis Using WinBUGS," Econometrics 0509004, EconWPA. [Downloadable!]
    Other versions:
  5. Holloway, Garth & Lacombe, Donald & Lesage, James P., 2006. "Spatial Econometric Issues for Bio-Economic and Land-Use Modeling," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25525, International Association of Agricultural Economists. [Downloadable!]
    Other versions:
  6. Subal Kumbhakar & Efthymios Tsionas, 2008. "Scale and efficiency measurement using a semiparametric stochastic frontier model: evidence from the U.S. commercial banks," Empirical Economics, Springer, vol. 34(3), pages 585-602, June. [Downloadable!] (restricted)
  7. Kuosmanen, Timo, 2006. "Stochastic Nonparametric Envelopment of Data: Combining Virtues of SFA and DEA in a Unified Framework," Discussion Papers 11864, MTT Agrifood Research Finland. [Downloadable!]
  8. Antonio Álvarez & Carlos Arias & William Greene, 2004. "Accounting for unobservables in production models:management and inefficiency," Economic Working Papers at Centro de Estudios Andaluces E2004/72, Centro de Estudios Andaluces. [Downloadable!]
    Other versions:
  9. Tom Kompas, 2004. "Market reform, productivity and efficiency in Vietnamese rice production," International and Development Economics Working Papers idec04-4, International and Development Economics. [Downloadable!]
    Other versions:
  10. William Greene, 2002. "Fixed and Random Effects in Stochastic Frontier Models," Working Papers 02-16, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
  11. Geraint Johnes & Manuel Salas-Velasco, 2007. "The Determinants Of Costs And Efficiencies Where Producers Are Heterogeneous: The Case Of Spanish Universities," Economics Bulletin, Economics Bulletin, vol. 4(15), pages 1-9. [Downloadable!]
  12. Alfonso Flores-Lagunes & William C. Horrace & Kurt E. Schnier, 2006. "Identifying Technically Efficient Fishing Vessels: A Non-Empty, Minimal Subset Approach," Center for Policy Research Working Papers 78, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
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  13. Geraint Johnes & Jill Johnes, 2005. "Higher education institutions' costs and efficiency: taking the decomposition a further step," Working Papers 003052, Lancaster University Management School, Economics Department. [Downloadable!]
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  14. Hailu, Getu & Goddard, Ellen & Jeffrey, Scott, 2005. "Measuring Efficiency in Fruit and Vegetable Marketing Co-operatives with Heterogeneous Technologies in Canada," 2005 Annual meeting, July 24-27, Providence, RI 19507, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  15. Andrea Brasili & Loredana Federico, 2008. "Recent Developments in Productivity and the Role of Entrepreneurship in Italy: An Industry View," Rivista di Politica Economica, SIPI Spa, vol. 98(2), pages 179-214, March-Apr. [Downloadable!]
  16. Cullmann, Astrid & Farsi, Mehdi & Filippini Massimo, 2009. "Unobserved Heterogeneity and International Benchmarking in Public Trasport," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0904, Biblioteca universitaria di Lugano (University Library of Lugano). [Downloadable!]
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  17. Geraint Johnes & T Agasisti, 2009. "Cost Structure, Efficiency and Heterogeneity in US Higher Education: An Empirical Analysis," Working Papers 005930, Lancaster University Management School, Economics Department. [Downloadable!]
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