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X-inefficiencies in the Japanese Manufacturing Industries II: Identifying X-inefficiencies assuming the Existence of Inefficiency Unobserved Production Factors

In: Production Efficiency with the Stochastic Management Model

Author

Listed:
  • Akio Torii

    (Chuo University, Institute of Economic Research)

Abstract

This chapter introduces a model that, instead of using the vintage model, assumes the existence of an important unobserved production factor. It suggests that technical inefficiency is observed in the estimation of the production function because this production factor cannot be explicitly accounted for. Based on this model, the chapter presents a method for testing whether the production factor is controlled or not. The test is conducted using data from Japanese manufacturing, and it demonstrates that the hypothesis of the existence of X-inefficiency cannot be rejected.

Suggested Citation

  • Akio Torii, 2026. "X-inefficiencies in the Japanese Manufacturing Industries II: Identifying X-inefficiencies assuming the Existence of Inefficiency Unobserved Production Factors," Springer Books, in: Production Efficiency with the Stochastic Management Model, chapter 0, pages 179-204, Springer.
  • Handle: RePEc:spr:sprchp:978-981-95-3501-9_6
    DOI: 10.1007/978-981-95-3501-9_6
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