Giannis Karagiannis () (Department of Economics, University of Macedonia, Greece) Vangelis Tzouvelekas () (Department of Economics, University of Crete, Greece)
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Due to the assumption that the best practice methods refer to each input separately instead of the whole set of inputs used by a firm, the benchmark technology as defined in the stochastic varying coefficient frontier model may be infeasible and theoretically improper whenever the maximum response coefficients are not coming from the same production unit. To overcome this problem we suggest an alternative procedure for measuring output-oriented and input-specific technical efficiency inspired from the maximum likelihood formulation of the non-neutral frontier model. The empirical results indicate that there are significant differences between the two procedures in terms of both the estimated efficiency scores (i.e., their means as well as of their frequency distribution) and the ranking of firms.
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Paper provided by University of Crete, Department of Economics in its series Working Papers with number
0725.
Find related papers by JEL classification: C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data D21 - Microeconomics - - Production and Organizations - - - Firm Behavior D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
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