A new approach to stochastic frontier estimation: DEA+
The outcome of a production process might not only deviate from a theoretical maximum due to inefficiency, but also because of non-controllable influences. This raises the issue of reliability of Data Envelopment Analysis in noisy environments. I propose to assume an i.i.d. data generating process with bounded noise component, so that the following approach is feasible: Use DEA to estimate a pseudo frontier first (nonparametric shape estimation). Next apply a ML- technique to the DEA-estimated efficiencies, to estimate the scalar value by which this pseudo-frontier must be shifted downward to get the true production frontier (location estimation). I prove, that this approach yields consistent estimates of the true frontier.
|Date of creation:||Jun 1996|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.wu.ac.at/economics/en
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 27-56, May.
- Sueyoshi, Toshiyuki, 1994. "Stochastic frontier production analysis: Measuring performance of public telecommunications in 24 OECD countries," European Journal of Operational Research, Elsevier, vol. 74(3), pages 466-478, May.
- Simar, L., "undated".
"Aspects of statistical analysis in DEA-type frontier models,"
CORE Discussion Papers RP
1226, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- SIMAR , Léopold, 1995. "Aspects of Statistical Analysis in DEA-Type Frontier Models," CORE Discussion Papers 1995061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kneip, A. & Simar, L., "undated". "A general framework for frontier estimation with panel data," CORE Discussion Papers RP 1224, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- KNEIP, Alois & SIMAR, Léopold, 1995. "A General Framework for Frontier Estimation with Panel Data," CORE Discussion Papers 1995060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kittelsen,S.A.C., 1999. "Monte Carlo simulations of DEA efficiency measures and hypothesis tests," Memorandum 09/1999, Oslo University, Department of Economics.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwwuw:wuwp039. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics)
If references are entirely missing, you can add them using this form.