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We propose an empirical application of models derived in Bonanno et al. (2017) for estimating cost efficiency (CE) on data used by Greene (1990) to test Gamma distribution for the inefficiency component and by Smith (2008) to test the dependence between the two error terms of a Stochastic Frontier (SF). We also derive the closed–form of density function of the overall error term and the formula to calculate the Cost Efficiency (CE) scores

Author

Listed:
  • Graziella Bonanno

    (University of Trieste)

  • Filippo Domma

    (University of Calabria)

Abstract

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Suggested Citation

  • Graziella Bonanno & Filippo Domma, 2018. "We propose an empirical application of models derived in Bonanno et al. (2017) for estimating cost efficiency (CE) on data used by Greene (1990) to test Gamma distribution for the inefficiency compone," Economics Bulletin, AccessEcon, vol. 38(4), pages 2379-2388.
    • Handle: RePEc:ebl:ecbull:eb-17-00786
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    References listed on IDEAS

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    1. Graziella Bonanno & Domenico De Giovanni & Filippo Domma, 2017. "The ‘wrong skewness’ problem: a re-specification of stochastic frontiers," Journal of Productivity Analysis, Springer, vol. 47(1), pages 49-64, February.
    2. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163.
    3. Murray D. Smith, 2008. "Stochastic frontier models with dependent error components," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 172-192, March.
    4. Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-676, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Stochastic frontier; cost efficiency; Copula functions; dependence; electricity;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • D2 - Microeconomics - - Production and Organizations

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