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A General Framework for Frontier Estimation with Panel Data

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  • KNEIP, Alois

    (CORE and Institut de Statistique, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • SIMAR, Léopold

    ()
    (CORE and Institut de Statistique, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

The main objective of the paper is to present a general framework for estimating production frontier models with panel data: a sample of firms i = 1, ... ,N is observed on several time periods t = 1. . .. , T. In this framework , nonparametric stochastic models for the frontier will be analysed. The usual parametric formulations of the literature are viewed as particular cases and the convergence of the obtained estimators in this general framework are investigated. Special attention is devoted to the role of N and of T on the speeds of convergence of the obtained estimators. First, a very general model is investigated, in this model almost no restriction is imposed on the structure of the model or of the inefficiencies. This model is estimable from a nonpruametric point of view but needs large values of T and of N to obtain reliable estimates of the individual production functions and estimates of the frontier function. Then more specific nonparametric firm effect models are presented. In these cases, only NT must be large to estimate the common production function; but again both large :N and T are needed for estimating individual efficiencies and for estimating the frontier. The methods are illustrated through a numerical example with real data.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1995060.

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Date of creation: 01 Nov 1995
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Handle: RePEc:cor:louvco:1995060

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