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A frontier approach to disequilibrium models

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  • Kaddour Hadri

Abstract

Due to aggregation (Muellbauer, 1978), market frictions (Benassy, 1982) and stochastic manipulable perceived rationing (Weinrich, 1984) it is very likely that the quantity transacted is less than the short side of a market affected by quantity rationing. This is we might observe in a given market simultaneously excess demand and excess supply. In this paper we suggest a frontier approach to specify these inefficiencies in disequilibrium models. This is done essentially by adding a truncated disturbance term to the traditional symmetric error. The new specification allows us to test for the presence of any type of inefficiency.

Suggested Citation

  • Kaddour Hadri, 1997. "A frontier approach to disequilibrium models," Applied Economics Letters, Taylor & Francis Journals, vol. 4(11), pages 699-701.
  • Handle: RePEc:taf:apeclt:v:4:y:1997:i:11:p:699-701
    DOI: 10.1080/758530652
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    References listed on IDEAS

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    1. Sneessens, Henri R., 1985. "Two alternative stochastic specification and estimation methods for quantity rationing models : A Monte-Carlo comparison," European Economic Review, Elsevier, vol. 29(1), pages 111-136.
    2. Tishler, Asher & Zang, Israel, 1979. "A switching regression method using inequality conditions," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 259-274.
    3. Weinrich, Gerd, 1984. "On the theory of effective demand under stochastic rationing," Journal of Economic Theory, Elsevier, vol. 34(1), pages 95-115, October.
    4. Ginsburgh, Victor & Tishler, Asher & Zang, Israel, 1980. "Alternative estimation methods for two-regime models : A mathematical programming approach," European Economic Review, Elsevier, vol. 13(2), pages 207-228, March.
    5. Richard Portes & David Winter, 1980. "Disequilibrium Estimates for Consumption Goods Markets in Centrally Planned Economies," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 137-159.
    6. GINSBURGH, Victor & TISHLER, Asher & ZANG, Israel, 1980. "Alternative estimation methods for two-regime models," LIDAM Reprints CORE 393, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Kaddour Hadri & Julie Whittaker, 1999. "Efficiency, Environmental Contaminants and Farm Size: Testing for Links Using Stochastic Production Frontiers," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 337-356, November.
    2. Kaddour Hadri & Cherif Guermat & Julie Whittaker, 2003. "Estimating Farm Efficiency in the Presence of Double Heteroscedasticity Using Panel Data," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 255-268, November.

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