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Production and stochastic efficiency: An application to the Colombian footwear and leather industry

Author

Listed:
  • Jorge Barrientos Marín
  • David Tobón
  • Alderid Gutiérrez

Abstract

In this paper, we characterize and study the efficiency of a representative set of firms in the leather and footwear sector in Bogotá, Bucaramanga, Cúcuta and the Metropolitan Area of Medellin. This study is based on a survey addressing multiple aspects of production in this industry (inputs, integration of activities, administrative management, innovation, exports, etc). Our results suggest that a reasonable percentage of total variance is accounted for by the variance of the inefficiency term. Additionally, the sample exhibits diminishing returns to labor. Even though many firms seem to be efficient, the leather sector as a whole is not operating near its production possibilities frontier.

Suggested Citation

  • Jorge Barrientos Marín & David Tobón & Alderid Gutiérrez, 2009. "Production and stochastic efficiency: An application to the Colombian footwear and leather industry," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 70, pages 165-190.
  • Handle: RePEc:lde:journl:y:2009:i:70:p:165-190
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    Keywords

    Efficiency; stochastic frontier; footwear and leather products;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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