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Separating Technical Change from Time-Varying Technical Inefficiency in the Absence of Distributional Assumptions

  • G. Karagiannis

    ()

  • P. Midmore
  • V. Tzouvelekas

This paper proposes an alternative model for separating technical change from time-varying technical inefficiency. The proposed formulation uses the general index, developed by Baltagi and Griffin (1988), to model technical change in the production frontier function and a quadratic function of time, as in Cornwell, Schmidt and Sickles (1990), to capture the temporal pattern of technical inefficiency. In such a setting, all parameters associated with the rate of technical change and the temporal pattern of technical inefficiency are identified separately. Moreover, the proposed formulation is independent of any distributional assumption concerning the one-sided error term associated with technical inefficiency, and it can be estimated in a single stage with non-linear FGLS. Empirical results based on a translog production frontier, and estimates of technical inefficiency and technical change are presented for the UK dairy sector over the period 1982–1992. Copyright Kluwer Academic Publishers 2002

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Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 18 (2002)
Issue (Month): 1 (July)
Pages: 23-38

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Handle: RePEc:kap:jproda:v:18:y:2002:i:1:p:23-38
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  1. Almas Heshmati & Subal C. Kumbhakar, 1997. "Estimation Of Technical Efficiency In Swedish Crop Farms: A Pseudo Panel Data Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 22-37.
  2. Coelli, Tim J. & Battese, George E., 1996. "Identification Of Factors Which Influence The Technical Inefficiency Of Indian Farmers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(02), August.
  3. Kumbhakar, Subal C & Hjalmarsson, Lennart, 1995. " Decomposing Technical Change with Panel Data: An Application to the Public Sector," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(2), pages 309-23, June.
  4. Battese, G. E. & Tessema, G. A., 1993. "Estimation of stochastic frontier production functions with time-varying parameters and technical efficiencies using panel data from Indian villages," Agricultural Economics, Blackwell, vol. 9(4), pages 313-333, December.
  5. S. M. Mukhtar & P. J. Dawson, 1990. "Herd Size And Unit Costs Of Production In The England And Wales Dairy Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(1), pages 9-20.
  6. 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.
  7. 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.
  8. Son, Tran Vo Hung & Coelli, Tim & Fleming, Euan, 1993. "Analysis of the technical efficiency of state rubber farms in Vietnam," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 9, September.
  9. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-23, August.
  10. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  11. C. R. Dryburgh & C. J. Doyle, 1995. "Distribution Of Research Gains Under Different Market Structures: The Impact Of Technological Change Within The Uk Dairy Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(1), pages 80-96.
  12. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1989. "Production Frontiers With Cross-Sectinal And Time-Series Variation In Efficiency Levels," Working Papers 89-18, C.V. Starr Center for Applied Economics, New York University.
  13. Kumbhakar, Subal C. & Heshmati, Almas & Hjalmarsson, Lennart, 1997. "Temporal patterns of technical efficiency: Results from competing models," International Journal of Industrial Organization, Elsevier, vol. 15(5), pages 597-616, August.
  14. W, Y, 1995. "Productivity Growth, Technological Progress, and Technical Efficiency Change in China: A Three-Sector Analysis1," Journal of Comparative Economics, Elsevier, vol. 21(2), pages 207-229, October.
  15. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
  16. Baltagi, Badi H & Griffin, James M, 1988. "A General Index of Technical Change," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 20-41, February.
  17. George E. Battese & Sohail J. Malik & Manzoor A. Gill, 1996. "An Investigation Of Technical Inefficiencies Of Production Of Wheat Farmers In Four Districts Of Pakistan," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 37-49.
  18. Rigby, Dan & Young, Trevor, 1996. "European Environmental Regulations to Reduce Water Pollution: An Analysis of Their Impact on UK Dairy Farms," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(1), pages 59-78.
  19. Almas Heshmati, 1998. "Efficiency measurement in rotating panel data," Applied Economics, Taylor & Francis Journals, vol. 30(7), pages 919-930.
  20. Konstantinos Giannakas & Kien Tran & Vangelis Tzouvelekas, 2000. "Efficiency, technological change and output growth in Greek olive growing farms: a Box-Cox approach," Applied Economics, Taylor & Francis Journals, vol. 32(7), pages 909-916.
  21. Ahmad, Munir & Boris E., Bravo-Ureta, 1995. "An econometric decomposition of dairy output growth," MPRA Paper 37678, University Library of Munich, Germany.
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