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Measuring Technical Efficiency in the Stochastic Varying Coefficient Frontier Model

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Author Info

  • Giannis Karagiannis

    ()
    (Department of Economics, University of Macedonia, Greece)

  • Vangelis Tzouvelekas

    ()
    (Department of Economics, University of Crete, Greece)

Abstract

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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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0725.

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Length: 18 pages
Date of creation: 29 May 2007
Date of revision:
Handle: RePEc:crt:wpaper:0725

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Keywords: stochastic varying coefficient frontier model; input specific technical efficiency; olive farming; Greece;

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Cited by:
  1. Singbo, Alphonse G. & Emvalomatis, Grigorios & Alfons, Oude Lansink, 2012. "Assessing the impact of crop specialization on farms’ performance in vegetables farming in Benin: a non-neutral stochastic frontier approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149172, Agricultural and Applied Economics Association.
  2. Dios-Palomares, Rafaela & Martínez-Paz, José M., 2011. "Technical, quality and environmental efficiency of the olive oil industry," Food Policy, Elsevier, vol. 36(4), pages 526-534, August.

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