IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Interpreting and Testing the Scaling Property in Models where Inefficiency Depends on Firm Characteristics

  • Antonio Alvarez

    ()

  • Christine Amsler

    ()

  • Luis Orea

    ()

  • Peter Schmidt

    ()

Let u ≥ 0 be technical inefficiency, let z be a set of variables that affect u, and let δ be the parameters of this relationship. The model satisfies the scaling property if u(z, δ) can be written as a scaling function h(z, δ) times a random variable u* that does not depend on z. This property implies that changes in z affect the scale but not the shape of u(z,δ). This paper reviews the existing literature and identifies models that do and do not have the scaling property. It also discusses practical advantages of the scaling property. The paper shows how to test the hypothesis of scaling, and other interesting hypotheses, in the context of the model of Wang, Journal of Productivity Analysis, 2002. Finally, two empirical examples are given. Copyright Springer Science+Business Media, LLC 2006

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.1007/s11123-006-7639-3
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

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

Volume (Year): 25 (2006)
Issue (Month): 3 (06)
Pages: 201-212

as
in new window

Handle: RePEc:kap:jproda:v:25:y:2006:i:3:p:201-212
DOI: 10.1007/s11123-006-7639-3
Contact details of provider: Web page: http://www.springer.com

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

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. repec:ecr:col114:28022 is not listed on IDEAS
  2. Wang, Hung-Jen, 2003. "A Stochastic Frontier Analysis of Financing Constraints on Investment: The Case of Financial Liberalization in Taiwan," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(3), pages 406-19, July.
  3. anonymous, 2000. "Strengthening the emerging market economies," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 44(Jun), pages 228-231.
  4. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27990, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  5. ., 2000. "Inflation and economic performance," Chapters, in: Macroeconomic Instability and Coordination, chapter 8 Edward Elgar Publishing.
  6. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Aug.
  7. Peter-J Jost, 2011. "The Economics of Organization and Coordination," Books, Edward Elgar Publishing, number 13332.
  8. anonymous, 2000. "Reviewing economic development needs," Banking and Community Perspectives, Federal Reserve Bank of Dallas, issue 2, pages 6-7.
  9. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27985, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  10. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
  11. Peter Schmidt & Chirok Han & Luis Orea, 2004. "Estimation of a Panel Data Model with Parametric Temporal Variation in Individual Effects," Econometric Society 2004 Far Eastern Meetings 519, Econometric Society.
  12. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27987, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  13. Wang, Hung-jen & Schmidt, Peter, 2001. "One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels," MPRA Paper 31075, University Library of Munich, Germany, revised Mar 2002.
  14. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27983, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  15. -, 2000. "Meeting held on engendering macroeconomic policy," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 2, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  16. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Feb.
  17. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-86, July.
  18. Wang, Hung-Jen, 2002. "Heteroscedasticity and non-monotonic efficiency effects of a stochastic frontier model," MPRA Paper 31076, University Library of Munich, Germany.
  19. 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.
  20. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  21. Hansen, B.E., 1991. "Inference when a Nuisance Parameter is Not Identified Under the Null Hypothesis," RCER Working Papers 296, University of Rochester - Center for Economic Research (RCER).
  22. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27986, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  23. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Sep.
  24. Caudill, Steven B. & Ford, Jon M., 1993. "Biases in frontier estimation due to heteroscedasticity," Economics Letters, Elsevier, vol. 41(1), pages 17-20.
  25. Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
  26. -, 2000. "Economic survey of Canada, 1999," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28797, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  27. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27988, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  28. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Jun.
  29. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27992, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  30. -, 2000. "Global economic developments, 1999," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 27471, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  31. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
  32. Marjolein C.J. Caniëls, 2000. "Knowledge Spillovers and Economic Growth," Books, Edward Elgar Publishing, number 1936.
  33. -, 2000. "Economic survey of United States, 1999," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28796, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  34. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Mar.
  35. Paulo A.L.D. Nunes & Jeroen C.J.M. van den Bergh, 2003. "The Ecological Economics of Biodiversity," Books, Edward Elgar Publishing, number 2993.
  36. Richard S.J. Tol, 2014. "Climate Economics," Books, Edward Elgar Publishing, number 15366.
  37. Anonymous, 2000. "Agricultural Economics Volumes 1-22, 1986-2000," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 23(2), August.
  38. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  39. ., 2000. "Ideology and analysis in macroeconomics," Chapters, in: Macroeconomic Instability and Coordination, chapter 18 Edward Elgar Publishing.
  40. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue May.
  41. Anonymous, 2000. "Microeconomic Reform and the Environment," Conference/Workshop Proceedings 31908, Productivity Commission.
  42. anonymous, 2000. "Twelfth District economic update," Western economic developments, Federal Reserve Bank of San Francisco, issue Dec, pages 5.
  43. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27984, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  44. Cuesta, Rafael A. & Orea, Luis, 2002. "Mergers and technical efficiency in Spanish savings banks: A stochastic distance function approach," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2231-2247.
  45. Caudill, Steven B & Ford, Jon M & Gropper, Daniel M, 1995. "Frontier Estimation and Firm-Specific Inefficiency Measures in the Presence of Heteroscedasticity," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 105-11, January.
  46. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
  47. -, 2000. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 27991, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  48. anonymous, 2000. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Nov.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kap:jproda:v:25:y:2006:i:3:p:201-212. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)

or (Rebekah McClure)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.