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Group-specific stochastic production frontier models with parametric specifications

Listed author(s):
  • Lee, Young Hoon

This paper develops a stochastic frontier model that not only focuses more on group-specific temporal variations in technical efficiency rather than individual temporal variations, but also allows for a parametric function of the time-varying coefficient of the efficiency factor. We derived the concentrated least squares estimator and its asymptotic properties. When applied to the Penn World data set, the group-specific models yield much more variation in the temporal patterns of efficiency across countries. This application demonstrates the feasibility of applying a group-specific stochastic frontier model with a parametric function of temporal pattern to a real empirical analysis.

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File URL: http://www.sciencedirect.com/science/article/pii/S0377-2217(09)00030-7
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Article provided by Elsevier in its journal European Journal of Operational Research.

Volume (Year): 200 (2010)
Issue (Month): 2 (January)
Pages: 508-517

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Handle: RePEc:eee:ejores:v:200:y:2010:i:2:p:508-517
Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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  1. Han, Chirok & Orea, Luis & Schmidt, Peter, 2005. "Estimation of a panel data model with parametric temporal variation in individual effects," Journal of Econometrics, Elsevier, vol. 126(2), pages 241-267, June.
  2. Sangho Kim & Young Hoon Lee, 2006. "The productivity debate of East Asia revisited: a stochastic frontier approach," Applied Economics, Taylor & Francis Journals, vol. 38(14), pages 1697-1706.
  3. Alan B. Krueger, 1999. "Measuring Labor's Share," American Economic Review, American Economic Association, vol. 89(2), pages 45-51, May.
  4. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
  5. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  6. Rafael Cuesta, 2000. "A Production Model With Firm-Specific Temporal Variation in Technical Inefficiency: With Application to Spanish Dairy Farms," Journal of Productivity Analysis, Springer, vol. 13(2), pages 139-158, March.
  7. Basu, Susanto & Fernald, John G, 1997. "Returns to Scale in U.S. Production: Estimates and Implications," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 249-283, April.
  8. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
  9. Alan Krueger, 1999. "Measuring Labor's Share," Working Papers 792, Princeton University, Department of Economics, Industrial Relations Section..
  10. Lee, Young Hoon, 2006. "A stochastic production frontier model with group-specific temporal variation in technical efficiency," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1616-1630, November.
  11. Good, David H. & Roller, Lars-Hendrik & Sickles, Robin C., 1995. "Airline efficiency differences between Europe and the US: Implications for the pace of EC integration and domestic regulation," European Journal of Operational Research, Elsevier, vol. 80(3), pages 508-518, February.
  12. Ahn, Seung Chan & Hoon Lee, Young & Schmidt, Peter, 2001. "GMM estimation of linear panel data models with time-varying individual effects," Journal of Econometrics, Elsevier, vol. 101(2), pages 219-255, April.
  13. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 327-368.
  14. repec:fth:prinin:413 is not listed on IDEAS
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