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Do we estimate an input or an output distance function? An application of the mixture approach to European railways

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  • Subal Kumbhakar

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  • Luis Orea
  • Ana Rodríguez-Álvarez
  • Efthymios Tsionas

Abstract

In this paper, we estimate parametric input and output distance functions and discuss how to estimate a mixture/latent class model (LCM) involving the output and input distance functions in the context of multi-input and multi-output production technology. The proposed technique is applied to a panel data on European Railways (1971–1994). This model allows us to identify determinants of the efficiency orientation, thereby providing useful information that can help researchers to choose between the input and the output-oriented approaches. In addition, we develop cross-indices that can be used to compute input (output) technical inefficiency from the estimates of output (input) distance function. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Subal Kumbhakar & Luis Orea & Ana Rodríguez-Álvarez & Efthymios Tsionas, 2007. "Do we estimate an input or an output distance function? An application of the mixture approach to European railways," Journal of Productivity Analysis, Springer, vol. 27(2), pages 87-100, April.
  • Handle: RePEc:kap:jproda:v:27:y:2007:i:2:p:87-100 DOI: 10.1007/s11123-006-0031-5
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    References listed on IDEAS

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    1. 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, pages 51-71.
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    7. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    8. José Manuel Pastor Monsálvez & Lorenzo Serrano Martínez & Pedro Cantos, 2002. "Cost And Revenue Inefficiencies In The European Railways," Working Papers. Serie EC 2002-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    9. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
    10. Han, Chirok & Orea, Luis & Schmidt, Peter, 2005. "Estimation of a panel data model with parametric temporal variation in individual effects," Journal of Econometrics, Elsevier, pages 241-267.
    11. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
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    Cited by:

    1. Nguyen, Huy, 2014. "Crop diversification, economic performance and household’s behaviours Evidence from Vietnam," MPRA Paper 59090, University Library of Munich, Germany.
    2. repec:eee:soceps:v:59:y:2017:i:c:p:26-42 is not listed on IDEAS
    3. Haider Alzubaidi & Spiros Bougheas, "undated". "The Impact of the Global Financial Crisis on European Banking Efficiency," Discussion Papers 12/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    4. Ogundari, K. & Brümmer, Bernhard, 2011. "Estimating Technical Efficiency, Input substitution and complementary effects using Output Distance Function: A study of Cassava production in Nigeria," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 12(2), June.
    5. Rahman, Sanzidur & Kazal, Mohammad Mizanul Haque, 2015. "Whether crop diversification is energy efficient: An empirical analysis from Bangladesh," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 745-754.
    6. Heike Wetzel, 2008. "Productivity Growth in European Railways: Technological Progress,Efficiency Change and Scale Effects," Working Paper Series in Economics 101, University of Lüneburg, Institute of Economics.
    7. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2011. "Productivity and Subsidies in European Union Countries: An Analysis for Dairy Farms Using Input Distance Frontiers," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114396, European Association of Agricultural Economists.
    8. Latruffe, Laure & Bravo-Ureta, Boris E. & Moreira, Victor H. & Desjeux, Yann & Dupraz, Pierre, 2012. "Productivity and Subsidies in the European Union: An Analysis for Dairy Farms Using Input Distance Frontiers," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126846, International Association of Agricultural Economists.
    9. Rahman, Sanzidur & Barmon, Basanta K., 2012. "Energy productivity and efficiency of the ‘gher’ (prawn-fish-rice) farming system in Bangladesh," Energy, Elsevier, vol. 43(1), pages 293-300.
    10. Collier, Trevor & Johnson, Andrew L. & Ruggiero, John, 2011. "Technical efficiency estimation with multiple inputs and multiple outputs using regression analysis," European Journal of Operational Research, Elsevier, vol. 208(2), pages 153-160, January.

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