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A Consistent Approach to Cost Efficiency Measurement


  • Bitros, G.C.
  • Tsionas, E.G.


Consistent specifications of the allocative inefficiency function in cost plus input share equations systems may be difficult, if not impossible, to find because most plausible ones violate certain reasonable a priori conditions. Moreover, the models to which they lead give rise to highly non-linear likelihood functions that are very hard to estimate.

Suggested Citation

  • Bitros, G.C. & Tsionas, E.G., 2001. "A Consistent Approach to Cost Efficiency Measurement," DEOS Working Papers 124, Athens University of Economics and Business.
  • Handle: RePEc:aue:wpaper:124

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    References listed on IDEAS

    1. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
    2. Hanoch, Giora, 1975. "The Elasticity of Scale and the Shape of Average Costs," American Economic Review, American Economic Association, vol. 65(3), pages 492-497, June.
    3. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    4. Brian Motley, 1998. "Growth and inflation: a cross-country study," Economic Review, Federal Reserve Bank of San Francisco, pages 15-28.
    5. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    6. Clark, Todd E, 1997. "Cross-country Evidence on Long-Run Growth and Inflation," Economic Inquiry, Western Economic Association International, vol. 35(1), pages 70-81, January.
    7. Andrew J. Buck & Felix Fitzroy, 1988. "Inflation and Productivity Growth in the Federal Republic of Germany," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 10(3), pages 428-444, March.
    8. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    9. David Smyth, 1995. "The supply side effects of inflation in the United States: evidence from multifactor productivity," Applied Economics Letters, Taylor & Francis Journals, vol. 2(12), pages 482-483.
    10. Baltagi, Badi H & Griffin, James M, 1988. "A General Index of Technical Change," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 20-41, February.
    11. Appelbaum, Elie, 1979. "On the Choice of Functional Forms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 449-458, June.
    12. Berndt, Ernst R & Khaled, Mohammed S, 1979. "Parametric Productivity Measurement and Choice among Flexible Functional Forms," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1220-1245, December.
    13. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    14. Grimes, Arthur, 1991. "The effects of inflation on growth: some international evidence," MPRA Paper 68526, University Library of Munich, Germany.
    15. Gallant, A. Ronald, 1977. "Three-stage least-squares estimation for a system of simultaneous, nonlinear, implicit equations," Journal of Econometrics, Elsevier, vol. 5(1), pages 71-88, January.
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    Cited by:

    1. Vergés, Joaquim, 2014. "Evaluación de la eficiencia comparativa de empresas y entidades productivas: Indicadores y técnicas de análisis
      [Evaluating comparative efficiency of companies and productive entities: Measures and
      ," MPRA Paper 58329, University Library of Munich, Germany.
    2. Johannes Sauer & Klaus Frohberg & Henrich Hockmann, 2006. "Stochastic efficiency measurement: The curse of theoretical consistency," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 139-166, May.

    More about this item



    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


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