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On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model: some new formulations and generalizations

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On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model: some new formulations and generalizations. / Kumbhakar, Subal C.; Tsionas, Mike G.
In: European Journal of Operational Research, Vol. 287, No. 2, 01.12.2020, p. 762-775.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Kumbhakar, SC & Tsionas, MG 2020, 'On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model: some new formulations and generalizations', European Journal of Operational Research, vol. 287, no. 2, pp. 762-775. https://doi.org/10.1016/j.ejor.2020.04.046

APA

Kumbhakar, S. C., & Tsionas, M. G. (2020). On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model: some new formulations and generalizations. European Journal of Operational Research, 287(2), 762-775. https://doi.org/10.1016/j.ejor.2020.04.046

Vancouver

Kumbhakar SC, Tsionas MG. On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model: some new formulations and generalizations. European Journal of Operational Research. 2020 Dec 1;287(2):762-775. Epub 2020 May 15. doi: 10.1016/j.ejor.2020.04.046

Author

Kumbhakar, Subal C. ; Tsionas, Mike G. / On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model : some new formulations and generalizations. In: European Journal of Operational Research. 2020 ; Vol. 287, No. 2. pp. 762-775.

Bibtex

@article{9f4da6b974144158ae87d8bd864a4a49,
title = "On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model: some new formulations and generalizations",
abstract = "In this paper we propose some alternative formulations and estimation of technical and allocative inefficiency in the presence of some exogenous variables in the context of a panel stochastic frontier model which includes time-invariant firm effects (heterogeneity) along with time-varying technical inefficiency and random noise. These exogenous variables are used to explain technical and allocative inefficiency as well as firm heterogeneity. The presence of these exogenous variables allows us to relax some of the assumptions made in a recent paper by Lai and Kumbhakar (2019). These variables also allow to add flexibility in estimating the model parameters as well as both technical and allocative inefficiency and costs therefrom. More specifically, the incidental parameters problem associated with firm heterogeneity in the production function as well in the first-order conditions of cost minimization can be avoided by parameterizing them in terms of the exogenous variables. We propose and implement model comparison based on Bayes factors and marginal likelihood.",
keywords = "Productivity and competitiveness, Endogeneity, Technical efficiency, Allocative efficiency, Incidental parameters problem",
author = "Kumbhakar, {Subal C.} and Tsionas, {Mike G.}",
year = "2020",
month = dec,
day = "1",
doi = "10.1016/j.ejor.2020.04.046",
language = "English",
volume = "287",
pages = "762--775",
journal = "European Journal of Operational Research",
issn = "0377-2217",
publisher = "Elsevier Science B.V.",
number = "2",

}

RIS

TY - JOUR

T1 - On the estimation of technical and allocative efficiency in a panel stochastic production frontier system model

T2 - some new formulations and generalizations

AU - Kumbhakar, Subal C.

AU - Tsionas, Mike G.

PY - 2020/12/1

Y1 - 2020/12/1

N2 - In this paper we propose some alternative formulations and estimation of technical and allocative inefficiency in the presence of some exogenous variables in the context of a panel stochastic frontier model which includes time-invariant firm effects (heterogeneity) along with time-varying technical inefficiency and random noise. These exogenous variables are used to explain technical and allocative inefficiency as well as firm heterogeneity. The presence of these exogenous variables allows us to relax some of the assumptions made in a recent paper by Lai and Kumbhakar (2019). These variables also allow to add flexibility in estimating the model parameters as well as both technical and allocative inefficiency and costs therefrom. More specifically, the incidental parameters problem associated with firm heterogeneity in the production function as well in the first-order conditions of cost minimization can be avoided by parameterizing them in terms of the exogenous variables. We propose and implement model comparison based on Bayes factors and marginal likelihood.

AB - In this paper we propose some alternative formulations and estimation of technical and allocative inefficiency in the presence of some exogenous variables in the context of a panel stochastic frontier model which includes time-invariant firm effects (heterogeneity) along with time-varying technical inefficiency and random noise. These exogenous variables are used to explain technical and allocative inefficiency as well as firm heterogeneity. The presence of these exogenous variables allows us to relax some of the assumptions made in a recent paper by Lai and Kumbhakar (2019). These variables also allow to add flexibility in estimating the model parameters as well as both technical and allocative inefficiency and costs therefrom. More specifically, the incidental parameters problem associated with firm heterogeneity in the production function as well in the first-order conditions of cost minimization can be avoided by parameterizing them in terms of the exogenous variables. We propose and implement model comparison based on Bayes factors and marginal likelihood.

KW - Productivity and competitiveness

KW - Endogeneity

KW - Technical efficiency

KW - Allocative efficiency

KW - Incidental parameters problem

U2 - 10.1016/j.ejor.2020.04.046

DO - 10.1016/j.ejor.2020.04.046

M3 - Journal article

VL - 287

SP - 762

EP - 775

JO - European Journal of Operational Research

JF - European Journal of Operational Research

SN - 0377-2217

IS - 2

ER -