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The Econometric Measurement of Firms’ Efficiency

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  • Orea, Luis

Abstract

This working paper serves as guide to efficiency evaluation from an econometric perspective. The analytical framework relies on the most general parametric models and up to date representations of the production technology through Translog and Quadratic distance functions. We outline the most popular estimation methods: maximum likelihood, method-of-moments and distribution-free approaches. In the last section we discuss more advance topics such as how to control for observed and unobserved environmental variables or endogeneity issues. Other topics examined are dynamic efficiency measurement, production risk and uncertainty, and the decomposition of Malmquist productivity indices.

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  • Orea, Luis, 2019. "The Econometric Measurement of Firms’ Efficiency," Efficiency Series Papers 2019/02, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
  • Handle: RePEc:oeg:wpaper:2019/02
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