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Estimation of Output and Input Technical Efficiency Using a Flexible Form and Panel Data


  • Atkinson, Scott E
  • Cornwell, Christopher


The Farrell (1957) concept of technical efficiency can be measured in two ways--denoted output and input technical efficiency. The empirical literature does not distinguish between the two measures and confusion exists regarding the required restrictions on technology for the specification of either measure. With panel data, the authors show how both types of efficiency, when treated as fixed effects, are to be specified in the context of a translog cost system. Technical efficiency enters the share equations only in the output case when homotheticity is not imposed. The authors estimate their cost systems using panel data on U.S. airlines. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Atkinson, Scott E & Cornwell, Christopher, 1994. "Estimation of Output and Input Technical Efficiency Using a Flexible Form and Panel Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 245-255, February.
  • Handle: RePEc:ier:iecrev:v:35:y:1994:i:1:p:245-55

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    References listed on IDEAS

    1. Buiter,Willem H. & Marston,Richard C., 1986. "International Economic Policy Coordination," Cambridge Books, Cambridge University Press, number 9780521337809, March.
    2. Aizenman, Joshua, 1992. "Competitive Externalities and the Optimal Seigniorage," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(1), pages 61-71, February.
    3. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
    4. Kornai, Janos, 1986. "The Hungarian Reform Process: Visions, Hopes, and Reality," Journal of Economic Literature, American Economic Association, vol. 24(4), pages 1687-1737, December.
    5. Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. "Seigniorage and Political Instability," American Economic Review, American Economic Association, vol. 82(3), pages 537-555, June.
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    Cited by:

    1. Dhehibi, Boubaker, 2010. "Productive Efficiency in Water Usage: An Analysis of Differences among Citrus Producing Farms Sizes in Tunisia," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 97328, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    2. Amsler, Christine & Prokhorov, Artem & Schmidt, Peter, 2016. "Endogeneity in stochastic frontier models," Journal of Econometrics, Elsevier, vol. 190(2), pages 280-288.
    3. Martinez-Budria, Eduardo & Diaz-Hernandez, Juan Jose & Jara-Däaz, Sergio, 2011. "Productivity and efficiency with discrete variables and quadratic cost function," International Journal of Production Economics, Elsevier, vol. 132(2), pages 251-257, August.
    4. Juan JosÈ DÌaz-Hern·ndez, "undated". "Exact Allocative and Technical Inefficiency Using the Normalized Quadratic Cost System," Studies on the Spanish Economy 210, FEDEA.
    5. Roberto Furesi & Fabio Madau & Pietro Pulina, 2013. "Technical efficiency in the sheep dairy industry: an application on the Sardinian (Italy) sector," Demography, Springer;Population Association of America (PAA), vol. 1(1), pages 1-11, December.
    6. Madau, Fabio A., 2005. "Technical Efficiency in Organic Farming: An Application on Italian Cereal Farms Using a Parametric Approach," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24545, European Association of Agricultural Economists.
    7. Roibas, David & Arias, Carlos, 2004. "Endogeneity Problems in the Estimation of Multi-Output Technologies," Efficiency Series Papers 2004/06, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    8. Tzouvelekas, Vangelis & Pantzios, Christos J. & Fotopoulos, Christos, 2001. "Technical efficiency of alternative farming systems: the case of Greek organic and conventional olive-growing farms," Food Policy, Elsevier, vol. 26(6), pages 549-569, December.
    9. Luis Orea & David Roibás & Alan Wall, 2004. "Choosing the Technical Efficiency Orientation to Analyze Firms' Technology: A Model Selection Test Approach," Journal of Productivity Analysis, Springer, vol. 22(1), pages 51-71, July.
    10. Pierani, Pierpaolo & Rizzi, Pier Luigi, 2003. "Technology and efficiency in a panel of Italian dairy farms: an SGM restricted cost function approach," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 29(2), October.
    11. G. Karagiannis & V. Tzouvelekas & A. Xepapadeas, 2003. "Measuring Irrigation Water Efficiency with a Stochastic Production Frontier," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 57-72, September.
    12. Tai-Hsin Huang & Mei-Hui Wang, 2004. "Estimation of scale and scope economies in multiproduct banking: evidence from the Fourier flexible functional form with panel data," Applied Economics, Taylor & Francis Journals, vol. 36(11), pages 1245-1253.
    13. Pantzios, Christos J. & Rozakis, Stelios & Tzouvelekas, Vangelis, 2006. "Evading Farm Support Reduction via Efficient Input Use: The Case of Greek Cotton Growers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(03), December.
    14. Pantzios, Christos J. & Rozakis, Stelios & Tzouvelekas, Vangelis, 2002. "Assessing the Perspectives of EU Cotton Farming: Technical and Scale Efficiencies of Greek Cotton Growers," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24844, European Association of Agricultural Economists.
    15. David H. Good & M. Ishaq Nadiri & Robin C. Sickles, 1996. "Index Number and Factor Demand Approaches to the Estimation of Productivity," NBER Working Papers 5790, National Bureau of Economic Research, Inc.
    16. Scott Atkinson & Christopher Cornwell, 1998. "Estimating Radial Measures of Productivity Growth: Frontier vs Non-Frontier Approaches," Journal of Productivity Analysis, Springer, vol. 10(1), pages 35-46, July.
    17. Álvarez, Antonio & Arias, Carlos, 2001. "The Relationship Between Technical Efficiency and Farm Size," Efficiency Series Papers 2001/05, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    18. repec:spr:endesu:v:19:y:2017:i:4:d:10.1007_s10668-016-9793-8 is not listed on IDEAS
    19. Millan, Joaquin, 2004. "Scale and the Efficiency Production Function," Efficiency Series Papers 2004/02, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    20. Cisilino, Federica & Madau, Fabio A., 2007. "Organic and Conventional Farming: a Comparison Analysis through the Italian FADN," MPRA Paper 21786, University Library of Munich, Germany.
    21. Sari, Nazmi, 2003. "Efficiency outcomes of market concentration and managed care," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1571-1589, December.
    22. Fernandez, Carmen & Koop, Gary & Steel, Mark F.J., 2005. "Alternative efficiency measures for multiple-output production," Journal of Econometrics, Elsevier, vol. 126(2), pages 411-444, June.
    23. Khiabani, Nasser & Hasani, Karim, 2010. "Technical and allocative inefficiencies and factor elasticities of substitution: An analysis of energy waste in Iran's manufacturing," Energy Economics, Elsevier, vol. 32(5), pages 1182-1190, September.
    24. Florent Kinkingninhoun-Mêdagbé & Aliou Diagne & Franklin Simtowe & Afiavi Agboh-Noameshie & Patrice Adégbola, 2010. "Gender discrimination and its impact on income, productivity, and technical efficiency: evidence from Benin," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 27(1), pages 57-69, March.
    25. Madau, Fabio A., 2012. "Technical and scale efficiency in the Italian Citrus Farming: A comparison between Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis(DEA) Models," MPRA Paper 41403, University Library of Munich, Germany.

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