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A Consistent Approach to Cost Efficiency Measurement

Author

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  • Bitros, G.C.
  • Tsionas, E.G.

Abstract

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," Athens University of Economics and Business 124, Athens University of Economics and Business, Department of International and European Economic Studies.
    • Handle: RePEc:fth:athebu:124
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    References listed on IDEAS

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    1. Kumbhakar, Subal C., 1991. "Estimation of technical inefficiency in panel data models with firm- and time-specific effects," Economics Letters, Elsevier, vol. 36(1), pages 43-48, May.
    2. Atkinson, Scott E & Cornwell, Christopher, 1994. "Parametric Estimation of Technical and Allocative Inefficiency with Panel Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 231-243, February.
    3. George Bitros & Epaminondas Panas, 2001. "Is there an inflation-productivity trade-off? Some evidence from the manufacturing sector in Greece," Applied Economics, Taylor & Francis Journals, vol. 33(15), pages 1961-1969.
    4. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
    5. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    6. Caves, Douglas W & Christensen, Laurits R, 1980. "The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 958-976, October.
    7. Atkinson, Scott E & Cornwell, Christopher, 1994. "Estimation of Output and Input Technical Efficiency Using a Flexible Form and Panel Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 245-255, February.
    8. Kumbhakar, Subal C., 1997. "Modeling allocative inefficiency in a translog cost function and cost share equations: An exact relationship," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 351-356.
    9. Fare, R. & Grosskopf, S. & Logan, J., 1985. "The relative performance of publicly-owned and privately-owned electric utilities," Journal of Public Economics, Elsevier, vol. 26(1), pages 89-106, February.
    10. Kalirajan, K P, 1990. "On Measuring Economic Efficiency," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(1), pages 75-85, January-M.
    11. Atkinson, Scott E. & Halvorsen, Robert, 1986. "The relative efficiency of public and private firms in a regulated environment: The case of U.S. electric utilities," Journal of Public Economics, Elsevier, vol. 29(3), pages 281-294, April.
    12. Atkinson, Scott E & Halvorsen, Robert, 1984. "Parametric Efficiency Tests, Economies of Scale, and Input Demand in U.S. Electric Power Generation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(3), pages 647-662, October.
    13. Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-676, August.
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    Cited by:

    1. 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.
    2. 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.

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    More about this item

    Keywords

    COSTS ; MODELS ; LABOUR;
    All these keywords.

    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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