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Group-specific stochastic production frontier models with parametric specifications


  • 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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  • Lee, Young Hoon, 2010. "Group-specific stochastic production frontier models with parametric specifications," European Journal of Operational Research, Elsevier, vol. 200(2), pages 508-517, January.
  • Handle: RePEc:eee:ejores:v:200:y:2010:i:2:p:508-517

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    References listed on IDEAS

    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.
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    7. 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.
    8. 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.
    9. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
    10. 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.
    11. 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.
    12. 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.
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    14. 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.
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    Cited by:

    1. Lin, Winston T. & Chen, Yueh H. & Shao, Benjamin B.M., 2015. "Assessing the business values of information technology and e-commerce independently and jointly," European Journal of Operational Research, Elsevier, vol. 245(3), pages 815-827.
    2. Badunenko, Oleg & Kumbhakar, Subal C., 2016. "When, where and how to estimate persistent and transient efficiency in stochastic frontier panel data models," European Journal of Operational Research, Elsevier, vol. 255(1), pages 272-287.
    3. William Horrace & Seth Richards-Shubik & Ian Wright, 2015. "Expected efficiency ranks from parametric stochastic frontier models," Empirical Economics, Springer, vol. 48(2), pages 829-848, March.
    4. Wheat, Phill & Smith, Andrew, 2012. "Is the choice of (t−T) in Battese and Coelli (1992) type stochastic frontier models innocuous? Observations and generalisations," Economics Letters, Elsevier, vol. 116(3), pages 291-294.
    5. Lin, Winston T. & Chuang, Chia-Hung, 2013. "Investigating and comparing the dynamic patterns of the business value of information technology over time," European Journal of Operational Research, Elsevier, vol. 228(1), pages 249-261.
    6. Tsionas, Mike G., 2017. "Microfoundations for stochastic frontiers," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1165-1170.
    7. Lin, Winston T. & Kao, Ta-Wei (Daniel), 2014. "The partial adjustment valuation approach with dynamic and variable speeds of adjustment to evaluating and measuring the business value of information technology," European Journal of Operational Research, Elsevier, vol. 238(1), pages 208-220.
    8. Yip, Tsz Leung & Sun, Xin Yu & Liu, John J., 2011. "Group and individual heterogeneity in a stochastic frontier model: Container terminal operators," European Journal of Operational Research, Elsevier, vol. 213(3), pages 517-525, September.
    9. repec:eee:ejores:v:263:y:2017:i:3:p:1078-1094 is not listed on IDEAS


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