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Nonparametric Analysis of Technology and Productivity under Non-Convexity

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  • Chavas, Jean-Paul
  • Kim, Kwansoo

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 (DEA) 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.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149684.

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Date of creation: 2013
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Handle: RePEc:ags:aaea13:149684

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Keywords: technology; productivity; nonparametric; non-convexity; Farm Management; Production Economics; Productivity Analysis; Research Methods/ Statistical Methods;

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  1. Leleu, Herve, 2006. "A linear programming framework for free disposal hull technologies and cost functions: Primal and dual models," European Journal of Operational Research, Elsevier, vol. 168(2), pages 340-344, January.
  2. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
  3. Kristof Witte & Rui Marques, 2011. "Big and beautiful? On non-parametrically measuring scale economies in non-convex technologies," Journal of Productivity Analysis, Springer, vol. 35(3), pages 213-226, June.
  4. AGRELL, Per J. & BOGETOFT, Peter & BROCK, Michael & TIND, Jorgen, . "Efficiency evaluation with convex pairs," CORE Discussion Papers RP -1828, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Léopold Simar & Valentin Zelenyuk, 2011. "Stochastic FDH/DEA estimators for frontier analysis," Journal of Productivity Analysis, Springer, vol. 36(1), pages 1-20, August.
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