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Integrated spatial dependence into Stochastic Frontier Analysis

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  • Areal, Francisco Jose
  • Balcombe, Kelvin
  • Tiffin, Richard

Abstract

An approach to incorporate spatial dependence into stochastic frontier analysis is developed and applied to a sample of 215 dairy farms in England and Wales. A number of alternative specifications for the spatial weight matrix are used to analyse the effect of these on the estimation of spatial dependence. Estimation is conducted using a Bayesian approach and results indicate that spatial dependence is present when explaining technical inefficiency.

Suggested Citation

  • Areal, Francisco Jose & Balcombe, Kelvin & Tiffin, Richard, 2012. "Integrated spatial dependence into Stochastic Frontier Analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 1-21, December.
    • Handle: RePEc:ags:aareaj:229821
    DOI: 10.22004/ag.econ.229821
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