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A Production Model With Firm-Specific Temporal Variation in Technical Inefficiency: With Application to Spanish Dairy Farms

Listed author(s):
  • Rafael Cuesta
Registered author(s):

    This paper introduces a stochastic frontier production model which accommodates firm-specific temporal variation in technical inefficiency. Unlike Cornwell, Schmidt and Sickles (1990), technical inefficiency is not modeled through the intercept of the production frontier, but through an error component model. The proposed model is a generalization of the Battese and Coelli (1992) model, which imposed a common temporal pattern upon all firms. In our application involving Spanish dairy farms, we find that the new model is preferred to the Battese and Coelli (1992) model on the basis of the likelihood ratio test. Results provide a new source of information on the different patterns of technical inefficiency change among the 82 farms in the sample. Copyright Kluwer Academic Publishers 2000

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    File URL: http://hdl.handle.net/10.1023/A:1017297831646
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    Article provided by Springer in its journal Journal of Productivity Analysis.

    Volume (Year): 13 (2000)
    Issue (Month): 2 (March)
    Pages: 139-158

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    Handle: RePEc:kap:jproda:v:13:y:2000:i:2:p:139-158
    DOI: 10.1023/A:1017297831646
    Contact details of provider: Web page: http://www.springer.com

    Order Information: Web: http://www.springer.com/economics/microeconomics/journal/11123/PS2

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    1. Ahmad, Munir & Boris E., Bravo-Ureta, 1996. "Technical efficiency measures for dairy farms using panel data: a comparison of alternative model specifications," MPRA Paper 37703, University Library of Munich, Germany.
    2. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
    3. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    4. Caves, Douglas W & Christensen, Laurits R & Swanson, Joseph A, 1981. "Productivity Growth, Scale Economies, and Capacity Utilization in U.S. Railroads, 1955-74," American Economic Review, American Economic Association, vol. 71(5), pages 994-1002, December.
    5. ZELLNER, Arnold & KMENTA, Jan & DREZE, Jacques H., "undated". "Specification and estimation of Cobb-Douglas production function models," CORE Discussion Papers RP 12, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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