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The distribution and heterogeneity of technical efficiency within industries: An empirical assessment

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  • Fritsch, Michael
  • Stephan, Andreas

Abstract

This paper analyzes the distribution of technical efficiency within manufacturing industries. Using a representative sample of 35,000 firms in 255 industries of the German cost structure census, technical efficiencies are estimated by applying a deterministic frontier production function with firm-specific fixed effects. A new measure is also introduced for characterizing the extent of heterogeneity within an industry that is robust with regard to extreme values of a few small firms. It was found that the level of intra-industry heterogeneity is mainly determined by an industries' average technical efficiency, average firm size, capital intensity and the rate of new firm formation. Most strikingly, we find that in about 95 percent of industries the distribution of technical efficiency is skewed to the right, not to the left as is commonly assumed. -- Diese Arbeit analysiert die Verteilung von technischer Effizienz innerhalb von Branchen des Verarbeitenden Gewerbes. Die technische Effizienz wird als fir-menspezifischer fixer Effekt im Rahmen einer deterministischen Frontier-Pro-duktionsfunktion ermittelt. Als Grundlage hierfür dienen Angaben aus der Kostenstrukturstatistik für ein repräsentatives Sample von 35.000 Unternehmen in 255 Branchen. Zur Analyse der Heterogenität innerhalb der Branchen ent-wickeln wir ein neues Maß, das sich als relativ robust hinsichtlich einzelner extremer Werte erweist. Das Ausmaß an Heterogenität von technischer Effi-zienz innerhalb von Branchen wird im Wesentlichen vom durchschnittlichen Niveau an technischer Effizienz der Branche, der durchschnittlichen Unterneh-mensgröße, der durchschnittlichen Kapitalintensität und dem Ausmaß an Grün-dungen neuer Firmen in der Branche geprägt. Bemerkenswert ist insbesondere, dass die Verteilung der technischen Effizienz in ca. 95 Prozent der Branchen einen positiven Wert für die Schiefe aufweist (rechtsschief). Dies steht im Wi-derspruch zu der üblichen Annahme, dass die Schiefe negativ (linksschief) sei.

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Bibliographic Info

Paper provided by TU Bergakademie Freiberg, Faculty of Economics and Business Administration in its series Freiberg Working Papers with number 2004,12.

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Date of creation: 2004
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Handle: RePEc:zbw:tufwps:200412

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Keywords: Technical efficiency; heterogeneity; deterministic production function frontier; Technische Effizienz; Heterogenität; Deterministische Frontier-Produktionsfunktion;

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Citations

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Cited by:
  1. Oleg Badunenko & Michael Fritsch & Andreas Stephan, 2006. "Allocative Efficiency Measurement Revisited: Do We Really Need Input Prices?," Discussion Papers of DIW Berlin 591, DIW Berlin, German Institute for Economic Research.
  2. Arnab Bhattacharjee & Eduardo Castro & Chris Jensen-Butler, 2009. "Regional variation in productivity: a study of the Danish economy," Journal of Productivity Analysis, Springer, vol. 31(3), pages 195-212, June.
  3. Kozhan, Roman, 2006. "Multiple Priors And No-Transaction Region," Working Paper Series 2006,4, European University Viadrina Frankfurt (Oder), The Postgraduate Research Programme Capital Markets and Finance in the Enlarged Europe.
  4. Bialkowski, Jedrzej & Gottschalk, Katrin & Wisniewski, Tomasz Piotr, 2006. "Political Orientation of Government and Stock Market Returns," Working Paper Series 2006,9, European University Viadrina Frankfurt (Oder), The Postgraduate Research Programme Capital Markets and Finance in the Enlarged Europe.
  5. Arnab Bhattacharjee & Eduardo de Castro & (Late) Chris Jensen-Butler, 2007. "Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy," CDMA Working Paper Series 200723, Centre for Dynamic Macroeconomic Analysis.
  6. Vigenina, Denitsa & Kritikos, Alexander S., 2005. "The individual micro-lending contract: Is it a better design than joint-liability? - Evidence from Georgia," Working Paper Series 2005,10, European University Viadrina Frankfurt (Oder), The Postgraduate Research Programme Capital Markets and Finance in the Enlarged Europe.
  7. Fritsch, Michael & Stephan, Andreas, 2004. "What causes cross-industry differences of technical efficiency? An empirical investigation," Freiberg Working Papers 2004,13, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  8. Joachim Wagner, 2006. "Politikrelevante Folgerungen aus Analysen mit wirtschaftsstatistischen Einzeldaten der Amtlichen Statistik," Working Paper Series in Economics 16, University of Lüneburg, Institute of Economics.

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