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Do we estimate an input or an output distance function? An application of the mixture approach to European railways

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  • Subal Kumbhakar

    ()

  • Luis Orea
  • Ana Rodríguez-Álvarez
  • Efthymios Tsionas

Abstract

In this paper, we estimate parametric input and output distance functions and discuss how to estimate a mixture/latent class model (LCM) involving the output and input distance functions in the context of multi-input and multi-output production technology. The proposed technique is applied to a panel data on European Railways (1971–1994). This model allows us to identify determinants of the efficiency orientation, thereby providing useful information that can help researchers to choose between the input and the output-oriented approaches. In addition, we develop cross-indices that can be used to compute input (output) technical inefficiency from the estimates of output (input) distance function. Copyright Springer Science+Business Media, LLC 2007

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Bibliographic Info

Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 27 (2007)
Issue (Month): 2 (April)
Pages: 87-100

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Handle: RePEc:kap:jproda:v:27:y:2007:i:2:p:87-100

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Web page: http://www.springerlink.com/link.asp?id=100296

Related research

Keywords: Distance functions ; Technical efficiency orientation; Latent class models; D21·D24·L92;

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References

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  1. John Loizides & Efthymios G. Tsionas, 2004. "Dynamic Distributions of Productivity Growth in European Railways," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 45-75, January.
  2. 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.
  3. Loizides, John & Tsionas, Efthymios G., 2002. "Productivity growth in European railways: a new approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 36(7), pages 633-644, August.
  4. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
  5. Pedro Cantos & José Pastor & Lorenzo Serrano, 1999. "Productivity, efficiency and technical change in the European railways: A non-parametric approach," Transportation, Springer, vol. 26(4), pages 337-357, November.
  6. Greene, W., 2001. "Fixed and Random Effects in Nonlinear Models," New York University, Leonard N. Stern School Finance Department Working Paper Seires 01-01, New York University, Leonard N. Stern School of Business-.
  7. José Manuel Pastor Monsálvez & Lorenzo Serrano Martínez & Pedro Cantos, 2002. "Cost And Revenue Inefficiencies In The European Railways," Working Papers. Serie EC 2002-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  8. Friebel, Guido & Ivaldi, Marc & Vibes, Catherine, 2003. "Railway (De) Regulation : A European Efficiency Comparison," IDEI Working Papers 221, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2007.
  9. Cantos, Pedro & Maudos, Joaqui­n, 2001. "Regulation and efficiency: the case of European railways," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(5), pages 459-472, June.
  10. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
  11. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
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Cited by:
  1. Ogundari, Kolawole & Brummer, Bernhard, 2010. "Estimating Technical Efficiency, Input substitution and complementary effects using Output Distance Function: A study of Cassava production in Nigeria," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95773, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
  2. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2012. "Productivity and Subsidies in the European Union: An Analysis for Dairy Farms Using Input Distance Frontiers," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126846, International Association of Agricultural Economists.
  3. Haider Alzubaidi & Spiros Bougheas, . "The Impact of the Global Financial Crisis on European Banking Efficiency," Discussion Papers 12/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  4. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2011. "Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114396, European Association of Agricultural Economists.
  5. Heike Wetzel, 2008. "Productivity Growth in European Railways: Technological Progress,Efficiency Change and Scale Effects," Working Paper Series in Economics 101, University of Lüneburg, Institute of Economics.
  6. Collier, Trevor & Johnson, Andrew L. & Ruggiero, John, 2011. "Technical efficiency estimation with multiple inputs and multiple outputs using regression analysis," European Journal of Operational Research, Elsevier, vol. 208(2), pages 153-160, January.

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