Meta-frontier and technology switchers: A nonparametric approach

The concept of meta-frontier has been proposed in order to deal with group heterogeneity among entities for nonparametric efficiency analysis. In brief, the meta-frontier is defined as the envelopment of the group-specific frontiers and naturally allows one to distinguish inefficiency from technology gap. While this concept has demonstrated its usefulness for empirical studies and been extended in several directions, two major shortcomings are the fixed number of groups and the static allocation of entities across groups. This is particularly problematic when dealing with panel data. In this paper, we extend the meta-frontier approach when technology switchers are considered, and quantify the impacts of the switchers on inefficient behavior and technology gap. We demonstrate the usefulness of our new methodology with the case of the technology clubs in the world economy.