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Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach

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Author Info
Cinzia Daraio
Leopold Simar

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Abstract

This paper proposes a general formulation of a nonparametric frontier model introducingexternal environmental factors that might influence the production process butare neither inputs nor outputs under the control of the producer. A representation isproposed in terms of a probabilistic model which defines the data generating process.Our approach extends the basic ideas from Cazals, Florens and Simar (2002) to thefull multivariate case. We introduce the concepts of conditional efficiency measure andof conditional efficiency measure of order-m. Afterwards we suggest a practical wayfor computing the nonparametric estimators. Finally, a simple methodology to investigatethe influence of these external factors on the production process is proposed.Numerical illustrations through some simulated examples and through a real data seton Mutual Funds show the usefulness of the approach.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2003/17.

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Date of creation: 19 Dec 2003
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Handle: RePEc:ssa:lemwps:2003/17

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Keywords: production function; frontier; nonparametric estimation; environmental factors; robust estimation.;

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  1. Simar, L. & Wilson, P.W., 1999. "Statistical Inference in Nonparametric Frontier Models: the State of the Art," Papers 9904, Catholique de Louvain - Institut de statistique.
  2. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February. [Downloadable!] (restricted)
  3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November. [Downloadable!] (restricted)
  4. Park, B.U. & Simar, L. & Weiner, Ch., 2000. "The Fdh Estimator For Productivity Efficiency Scores," Econometric Theory, Cambridge University Press, vol. 16(06), pages 855-877, December. [Downloadable!]
  5. Simar, Leopold & Wilson, Paul W., 2002. "Non-parametric tests of returns to scale," European Journal of Operational Research, Elsevier, vol. 139(1), pages 115-132, May. [Downloadable!] (restricted)
  6. Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January. [Downloadable!] (restricted)
  7. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January. [Downloadable!] (restricted)
  8. Kneip, Alois & Park, Byeong U. & Simar, L opold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, vol. 14(06), pages 783-793, December. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Catherine Cazals & Paul Dudley & Jean-Pierre Florens & Shital Patel & Frank Rodriguez, 2008. "Delivery Offices Cost Frontier: A Robust Non Parametric Approach with Exogenous Variables," Review of Network Economics, Concept Economics, vol. 7(2), pages 294-308, June. [Downloadable!]
    Other versions:
  2. Bonaccorsi, Andrea & Daraio, Cinzia & Räty, Tarmo & Simar, Léopold, 2007. "Efficiency and University Size: Discipline-wise Evidence from European Universities," MPRA Paper 10265, University Library of Munich, Germany. [Downloadable!]
  3. Kristof De Witte & Elbert Dijkgraaf, 2007. "Mean and Bold?," Tinbergen Institute Discussion Papers 07-092/3, Tinbergen Institute. [Downloadable!]
  4. Luiza Badin & Cinzia Daraio & Léopold Simar, 2008. "Optimal Bandwidth Selection for Conditional Efficiency Measures: a Data-driven Approach," LEM Papers Series 2008/22, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  5. Cinzia Daraio & Léopold Simar, 2007. "Conditional nonparametric frontier models for convex and nonconvex technologies: a unifying approach," Journal of Productivity Analysis, Springer, vol. 28(1), pages 13-32, October. [Downloadable!] (restricted)
    Other versions:
  6. Massimo Filippini & Nevenka Hrovatin & Jelena Zorić, 2008. "Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods," Journal of Productivity Analysis, Springer, vol. 29(2), pages 169-182, April. [Downloadable!] (restricted)
  7. Manuel Illueca & José Pastor & Emili Tortosa-Ausina, 2009. "The effects of geographic expansion on the productivity of Spanish savings banks," Journal of Productivity Analysis, Springer, vol. 32(2), pages 119-143, October. [Downloadable!] (restricted)
  8. Daniel Santín, 2006. "Measuring technical efficiency in schools: a critic revision," Hacienda Pública Española, IEF, vol. 177(2), pages 57-82, April. [Downloadable!]
  9. Bart Los & Bart Verspagen, 2009. "Localized innovation, localized diffusion and the environment: an analysis of reductions of CO2 emissions by passenger cars," Journal of Evolutionary Economics, Springer, vol. 19(4), pages 507-526, August. [Downloadable!] (restricted)
  10. De Witte, Kristof & Mika, Kortelainen, 2009. "Blaming the exogenous environment? Conditional efficiency estimation with continuous and discrete exogenous variables," MPRA Paper 14034, University Library of Munich, Germany. [Downloadable!]
  11. Azad, Md Abdus Samad & Liem, Monica & Ancev, Tihomir & Lee, Lisa Yu-Ting, 2008. "Measuring Environmental Performance of Irrigated Cotton Enterprises," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6004, Australian Agricultural and Resource Economics Society. [Downloadable!]
  12. David C. Wheelock & Paul Wilson, 2007. "Non-parametric, unconditional quantile estimation for efficiency analysis with an application to Federal Reserve check processing operations," Working Papers 2005-027, Federal Reserve Bank of St. Louis. [Downloadable!]
    Other versions:
  13. José Manuel Cordero Ferrera & Francisco Pedraja Chaparro & Javier Salinas Jiménez, 2005. "Secondary schools efficiencyand non-controllable inputs: sensibility of the results to different DEA model specifications," Hacienda Pública Española, IEF, vol. 173(2), pages 61-83, June. [Downloadable!]
  14. Laurens Cherchye & Bruno De Borger & Tom Van Puyenbroeck, 2004. "Nonparametric tests of optimizing behavior in public service provision: Methodology and an application to local safety," Public Economics Working Paper Series ces0416, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics. [Downloadable!]
    Other versions:
  15. Los, Bart & Verspagen, Bart, 2008. "Localized Innovation, Localized Diffusion and the Environment: An Analysis of CO2 Emission Reductions by Passenger Cars, 2000-2007," UNU-MERIT Working Paper Series 037, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology. [Downloadable!]
    Other versions:
  16. Muliaman D. Hadad & Maximilian J. B. Hall & Wimboh Santoso & Ricky Satria & Karligash Kenjegalieva & Richard Simper, 2008. "Efficiency in Indonesian Banking: Recent Evidence," Discussion Paper Series 2008_13, Department of Economics, Loughborough University, revised Nov 2008. [Downloadable!]
  17. Catalán, Beatriz & Trívez, F. Javier, 2006. "Effects of the additive Outliers in the forecasting of the conditional variance of an Arch model/Efectos de los Outliers aditivos en la predicción de la varianza condicional de un modelo Arch," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 24, pages 531-543, Abril. [Downloadable!] (restricted)
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