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Nonparametric analysis of technology and productivity under non-convexity: a neighborhood-based approach

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  • Jean-Paul Chavas
  • Kwansoo Kim

Abstract

This paper investigates the nonparametric analysis of technology under non-convexity. The analysis extends two approaches now commonly used in efficiency and productivity analysis: data envelopment analysis where convexity is imposed; and free disposal hull (FDH) models. We argue that, while the FDH model allows for non-convexity, its representation of non-convexity is too extreme. We propose a new nonparametric model that relies on a neighborhood-based technology assessment which allows for less extreme forms of non-convexity. The distinctive feature of our approach is that it allows for non-convexity to arise in any part of the feasible set. We show how it can be implemented empirically by solving simple linear programming problems. And we illustrate the usefulness of the approach in an empirical application to the analysis of technical and scale efficiency on Korean farms. Copyright Springer Science+Business Media New York 2015

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  • Jean-Paul Chavas & Kwansoo Kim, 2015. "Nonparametric analysis of technology and productivity under non-convexity: a neighborhood-based approach," Journal of Productivity Analysis, Springer, vol. 43(1), pages 59-74, February.
    • Handle: RePEc:kap:jproda:v:43:y:2015:i:1:p:59-74
    DOI: 10.1007/s11123-014-0383-1
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    Cited by:

    1. Walter Briec & Kristiaan Kerstens & Ignace Van de Woestyne, 2022. "Nonconvexity in Production and Cost Functions: An Exploratory and Selective Review," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 18, pages 721-754, Springer.
    2. Jean-Paul Chavas & Kwansoo Kim, 2016. "On the Microeconomics of Specialization: the Role of Non-Convexity," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(3), pages 387-403, September.

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    More about this item

    Keywords

    Technology; Productivity; Nonparametric; Non-convexity; C6; D2; Q12;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D2 - Microeconomics - - Production and Organizations
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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