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  • 12042018_KKT Spatial SFA Endogeneity- v.2_LK

    Rights statement: This is the author’s version of a work that was accepted for publication in European Journal of Operational Research. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Journal of Operational Research, 286, 1, 2020 DOI: 10.1016/j.ejor.2020.03.020

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    Available under license: CC BY-NC-ND

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A spatial stochastic frontier model with endogenous frontier and environmental variables

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<mark>Journal publication date</mark>1/10/2020
<mark>Journal</mark>European Journal of Operational Research
Issue number1
Volume286
Number of pages11
Pages (from-to)389-399
Publication StatusPublished
Early online date19/03/20
<mark>Original language</mark>English

Abstract

We propose a spatial autoregressive stochastic frontier model, which allows for the endogeneity in both the frontier and environmental variables (i.e., endogeneity due to correlation of inefficiency term and two-sided error term). The model parameters are estimated using a single-stage control function approach. Monte Carlo simulations show that our proposed model and approach perform well in finite samples. We employed our methodology to the Chinese chemicals firm data and found evidence for both spatial effects and endogeneity.

Bibliographic note

This is the author’s version of a work that was accepted for publication in European Journal of Operational Research. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in European Journal of Operational Research, 286, 1, 2020 DOI: 10.1016/j.ejor.2020.03.020