Advanced Search
MyIDEAS: Login

Stochastic Production Frontier and Technical Inefficiency: A Sensitivity Analysis

Contents:

Author Info

  • Rafik Baccouche
  • Mokhtar Kouki
Registered author(s):

    Abstract

    The present paper focuses attention on the sensitivity of technical inefficiency to most commonly used one-sided distributions of the inefficiency error term, namely the truncated normal, the half-normal, and the exponential distributions. A generalized version of the half-normal, which does not embody the zero-mean restriction, is also explored. For each distribution, the likelihood function and the counterpart of the estimator of technical efficiency are explicitly stated (Jondrow, J., Lovell, C. A. K., Materov, I. S., Schmidt, P. ([1982]), On estimation of technical inefficiency in the stochastic frontier production function model, J. Econometrics19:233-238). Based on our panel data set, related to Tunisian manufacturing firms over the period 1983-1993, formal tests lead to a strong rejection of the zero-mean restriction embodied in the half normal distribution. Our main conclusion is that the degree of measured inefficiency is very sensitive to the postulated assumptions about the distribution of the one-sided error term. The estimated inefficiency indices are, however, unaffected by the choice of the functional form for the production function.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.tandfonline.com/doi/abs/10.1081/ETC-120017975
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Taylor and Francis Journals in its journal Econometric Reviews.

    Volume (Year): 22 (2003)
    Issue (Month): 1 ()
    Pages: 79-91

    as in new window
    Handle: RePEc:taf:emetrv:v:22:y:2003:i:1:p:79-91

    Contact details of provider:
    Web page: http://taylorandfrancis.metapress.com/link.asp?target=journal&id=107830

    Order Information:
    Web: http://www.tandf.co.uk/journals/subscription.asp

    Related research

    Keywords: Stochastic frontier; Farrell's technical inefficiency; Unbalanced panel data; Composed disturbance error; One-sided distribution;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Martins-Filho, Carlos & Yao, Feng, 2007. "Nonparametric frontier estimation via local linear regression," Journal of Econometrics, Elsevier, vol. 141(1), pages 283-319, November.
    2. Aivazian, Sergei & Afanasiev, Mikhail, 2009. "Estimation of the Economic Efficiency of a Shift to the Achievable Production Potential," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 15(3), pages 43-55.
    3. Hung-pin Lai & Cliff Huang, 2010. "Likelihood ratio tests for model selection of stochastic frontier models," Journal of Productivity Analysis, Springer, vol. 34(1), pages 3-13, August.
    4. Ravallion, Martin, 2003. "In measuring aggregate"social efficiency"," Policy Research Working Paper Series 3166, The World Bank.
    5. Vincent Mok & Godfrey Yeung & Zhaozhou Han & Zongzhang Li, 2010. "Export orientation and technical efficiency: clothing firms in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 453-463.
    6. Carlos Martins-FIlho & Feng Yao, 2004. "A Nonparametric Model of Frontiers," Econometric Society 2004 Latin American Meetings 102, Econometric Society.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:taf:emetrv:v:22:y:2003:i:1:p:79-91

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.