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Technical Efficiency of Australian Wool Production: Point and Confidence Interval Estimates

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Author Info
Iain Fraser (LaTrobe University)
William C. Horrace (Syracuse University)

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Abstract

A balanced panel of data is used to estimate technical efficiency, employing a fixed-effects stochastic frontier specification for wool producers in Australia. Both point estimates and confidence intervals for technical efficiency are reported. The confidence intervals are constructed using the Multiple Comparisons with the Best (MCB) procedure of Horrace and Schmidt (2000). The confidence intervals make explicit the precision of the technical efficiency estimates and underscore the dangers of drawing inferences based solely on point estimates. Additionally, they allow identification of wool producers that are statistically efficient and those that are statistically inefficient. The data reveal at the 95% confidence level that twenty-one of the twenty-six wool farms analyzed may be efficient.

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File URL: http://129.3.20.41/eps/pe/papers/0206/0206001.pdf
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Publisher Info
Paper provided by EconWPA in its series Public Economics with number 0206001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 34 pages
Date of creation: 19 Jun 2002
Date of revision: 11 May 2003
Handle: RePEc:wpa:wuwppe:0206001

Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP; pages: 34; figures: included/request from author/draw your own. Multiple comparison procedures applied to wool production
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Web page: http://129.3.20.41

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Related research
Keywords: Wool; Technical Efficiency; MCB; MCC;

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

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References listed on IDEAS
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. Kalirajan, K P & Shand, R T, 1999. " Frontier Production Functions and Technical Efficiency Measures," Journal of Economic Surveys, Blackwell Publishing, vol. 13(2), pages 149-72, April. [Downloadable!] (restricted)
  2. William H. Greene, 1993. "Frontier Production Functions," Working Papers 93-20, New York University, Leonard N. Stern School of Business, Department of Economics.
  3. George E. Battese & Lennart Hjalmarsson & Almas Heshmati, 2000. "Efficiency of labour use in the Swedish banking industry: a stochastic frontier approach," Empirical Economics, Springer, vol. 25(4), pages 623-640. [Downloadable!] (restricted)
    Other versions:
  4. Park, B.U. & Simar, L., 1992. "Efficient Semiparametric Estimation in Stochastic Frontier Model," Papers 9201, Catholique de Louvain - Institut de statistique.
    Other versions:
  5. Lawrence, Denis & Hone, Phillip, 1981. "Relative Economic Efficiency in the Australian Grazing Industry," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 49(01), April. [Downloadable!]
  6. Kim, Yangseon & Schmidt, Peter, 2008. "Marginal Comparisons With the Best and the Efficiency Measurement Problem," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 253-260, April. [Downloadable!] (restricted)
    Other versions:
  7. William C. Horrace & Peter Schmidt, 2002. "Confidence Statements for Efficiency Estimates from Stochastic Frontier Models," Econometrics 0206006, EconWPA. [Downloadable!]
  8. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211. [Downloadable!] (restricted)
  9. Cornwell, C. & Schmidt, P., 1993. "Production Frontiers and Efficiency Measurement," Papers 427e, Georgia - College of Business Administration, Department of Economics.
  10. Fraser, I. & Cordina, D., 1999. "An application of data envelopment analysis to irrigated dairy farms in Northern Victoria, Australia," Agricultural Systems, Elsevier, vol. 59(3), pages 267-282, March. [Downloadable!] (restricted)
  11. William C. Horrace & Peter Schmidt, 2000. "Multiple comparisons with the best, with economic applications," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(1), pages 1-26. [Downloadable!]
  12. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July. [Downloadable!] (restricted)
  13. Koop, Gary & Osiewalski, Jacek & Steel, Mark F. J., 1997. "Bayesian efficiency analysis through individual effects: Hospital cost frontiers," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 77-105. [Downloadable!] (restricted)
  14. Simar, L., 1991. "Estimating efficiencies from frontier models with panel data: a comparison of parametric, non-parametric and semi-parametric methods with boot strapping," CORE Discussion Papers 1991026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. Coelli, T.J., 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(03), December. [Downloadable!]
  16. Kim, H Youn, 1992. "The Translog Production Function and Variable Returns to Scale," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 546-52, August. [Downloadable!] (restricted)
  17. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August. [Downloadable!] (restricted)
  18. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-74, October.
  19. Coelli, Tim & Battese, George, 1996. "Identification Of Factors Which Influence The Technical Inefficiency Of Indian Farmers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(02), August. [Downloadable!]
  20. Peter Schmidt, 1985. "Frontier production functions," Econometric Reviews, Taylor and Francis Journals, vol. 4(2), pages 289-328. [Downloadable!] (restricted)
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Cited by:
(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. Lohr, Luanne & Park, Timothy A., 2006. "Technical Efficiency of U.S. Organic Farmers: The Complementary Roles of Soil Management Techniques and Farm Experience," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(2), October. [Downloadable!]
  2. Tai-Hsin Huang & Tong-Liang Kao, 2006. "Joint estimation of technical efficiency and production risk for multi-output banks under a panel data cost frontier model," Journal of Productivity Analysis, Springer, vol. 26(1), pages 87-102, August. [Downloadable!] (restricted)
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