A Recursive Thick Frontier Approach To Estimating Production Efficiency
AbstractWe introduce a new panel data estimation technique for cost and production functions: the Recursive Thick Frontier Approach (RTFA). RTFA has two advantages over existing thick frontier methods. First, technical inefficiency is allowed to be dependent on the explanatory variables of the frontier model. Secondly, no distributional assumptions are imposed on the inefficiency component of the error term. We show by means of simulation experiments that RTFA can outperform the popular stochastic frontier approach (SFA) and the “within” OLS estimator for realistic parameterisations of the productivity model.
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Bibliographic InfoPaper provided by Department of Economics, University of Victoria in its series Econometrics Working Papers with number 0503.
Length: 26 pages
Date of creation: 11 Mar 2005
Date of revision:
Note: ISSN 1485-6441
Contact details of provider:
Postal: PO Box 1700, STN CSC, Victoria, BC, Canada, V8W 2Y2
Web page: http://web.uvic.ca/econ
More information through EDIRC
Technical Efficiency; Efficiency Measurement; Frontier Production Functions; Recursive Thick Frontier Approach;
Other versions of this item:
- Rien J. L. M. Wagenvoort & Paul H. Schure, 2006. "A Recursive Thick Frontier Approach to Estimating Production Efficiency," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(2), pages 183-201, 04.
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- D2 - Microeconomics - - Production and Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-03-20 (All new papers)
- NEP-BEC-2005-03-20 (Business Economics)
- NEP-ECM-2005-03-20 (Econometrics)
- NEP-EFF-2005-03-20 (Efficiency & Productivity)
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