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Aggregation bias in stochastic frontier models employing region-level data: an empirical analysis with Korean manufacturing data

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  • Hyungna Oh

Abstract

A stochastic frontier study often employs aggregate data to analyse the productivity and technical efficiency of regions. In this article, a stochastic frontier model is run on plant-level data and region-level aggregate data. Comparisons of estimated coefficients and characteristics of regional production based on estimation outcomes suggest that an empirical model employing regional-level data can provide misleading results concerning the production function faced by a representative plant in a region.

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  • Hyungna Oh, 2012. "Aggregation bias in stochastic frontier models employing region-level data: an empirical analysis with Korean manufacturing data," Applied Economics Letters, Taylor & Francis Journals, vol. 19(9), pages 813-821, June.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:9:p:813-821
    DOI: 10.1080/13504851.2011.605750
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    References listed on IDEAS

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    1. Tyler, William G & Lee, Lung-Fei, 1979. "On Estimating Stochastic Frontier Production Functions and Average Efficiency: An Empirical Analysis with Colombian Micro Data," The Review of Economics and Statistics, MIT Press, vol. 61(3), pages 436-438, August.
    2. Jaume Puig‐Junoy, 2001. "Technical Inefficiency and Public Capital in U.S. States: A Stochastic Frontier Approach," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 75-96, February.
    3. 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 325-332.
    4. Carlo Altomonte & Italo Colantone, 2008. "Firm heterogeneity and endogenous regional disparities," Journal of Economic Geography, Oxford University Press, vol. 8(6), pages 779-810, November.
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    1. Víctor Giménez & Diego Prior & Emili Tortosa-Ausina, 2018. "The impact of efficiency on the economic growth of emerging economies: The case of Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 36(85), pages 86-100, April.

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