A selection of relevant issues in applied stochastic frontier analysis
DOI:
https://doi.org/10.17811/ebl.3.1.2014.3-11Abstract
This paper provides a concise review of a broad set of concepts, models and estimation issues in the field of stochastic frontier analysis. The goal is to provide practitioners with a quick guide to some key ideas. The review is restricted to single-output models estimated by econometric methods. Among the conceptual issues are the interpretation and the paths to reduce inefficiency. The modelling and estimation parts deal with topics such as explaining inefficiency, time-varying inefficiency and firm heterogeneity.
References
Ahn, S.C., Lee, Y.H. and Schmidt, P. (2007) Stochastic frontier models with multiple time-varying individual effects, Journal of Productivity Analysis, 27(1), 1-12.
Aigner, D., Lovell, K. and Schmidt, P. (1977) Formulation and estimation of stochastic frontier production function models, Journal of Econometrics, 6, 21-37.
Alvarez, A. (2007) Decomposing regional productivity growth using an aggregate production frontier, Annals of Regional Science, 41, 431-441.
Alvarez, A., Amsler, C., Orea, L. and Schmidt, P. (2006) Testing the scaling property in models where inefficiency depends on firm characteristics, Journal of Productivity Analysis, 25(3), 201-212.
Alvarez, A. and Arias, C. (2003) Diseconomies of size with fixed managerial ability in dairy farms, American Journal of Agricultural Economics, 85(1), 136-144.
Alvarez, A. and Arias, C. (2004) Technical efficiency and size. A conditional analysis, Agricultural Economics, 30(3), 241-250.
Alvarez, A. and Arias, C. (2013) Are dairy farms becoming more intensive? Impact on farm efficiency, Efficiency Series Paper 1/2013, Department of Economics, University of Oviedo.
Alvarez, A., Arias. C. and Greene, W. (2005) Accounting for unobservables in production models: management and inefficiency, Efficiency Series Paper 7/2005, Department of Economics, University of Oviedo.
Alvarez, A., Arias, C. and Kumbhakar, S. (2003) Empirical consequences of direction choice in technical efficiency analysis, Efficiency Series Paper 2/2003, Department of Economics, University of Oviedo.
Alvarez, A. and del Corral, J. (2006) Separating catch-up and technical change in stochastic frontier models: a Monte Carlo approach, Efficiency Series Paper 3/2006, Department of Economics, University of Oviedo.
Alvarez, A. and J. del Corral (2010), “Identifying Different Technologies Using a Latent Class Model. Intensive vs. Extensive Dairy Farms”, European Review of Agricultural Economics, 37(2), 231-250.
Alvarez, A. and Schmidt, P. (2006) “Is skill more important than luck in explaining fish catches?, Journal of Productivity Analysis, 26(1), 15-25.
Battese, G.E. and Coelli, T. (1992) Frontier production functions, technical efficiency and panel data: with application to paddy farmers in India, Journal of Productivity Analysis, 3, 153-169.
Battese, G.E. and Coelli, T. (1995) A model for technical efficiency effects in a stochastic frontier production function for panel data, Empirical Economics, 20, 325-332.
Cornwell, C., Schmidt, P. and Sickles, R. (1990) Production frontiers with cross-sectional and time-series variation in efficiency levels, Journal of Econometrics, 46, 185-200.
Farrell, M.J. (1957) The measurement of production efficiency, Journal of the Royal Statistics Society A, 120, 253-281.
Gonzalez, E. and Alvarez, A. (2001) From efficiency measurement to efficiency improvement, European Journal of Operational Research, 133(3), 58-66.
Greene, W. (2002) Alternative panel data estimators for stochastic frontier models, mimeo, Stern School of Business, New York University.
Greene, W. (2005) Reconsidering heterogeneity in panel data estimators of the stochastic frontier model, Journal of Econometrics, 126(2), 269-303.
Greene, W. (2007) Limdep user’s guide v. 9.0, Econometric Software.
Huang, C.J. and Liu, J.T. (1994) Estimation of a non-neutral stochastic frontier cost function, Journal of Productivity Analysis, 5, 171-180.
Kopp, R.J. (1981) The measurement of productive efficiency. A reconsideration, The Quarterly Journal of Economics, 96(3), 477-503.
Kumbhakar, S. (1990) Production frontiers, panel data and time-varying technical inefficiency, Journal of Econometrics, 46, 201-211.
Kumbhakar, S.C. and Hjalmarsson, L. (1993) Technical efficiency and technical progress in Swedish dairy farms, in Fried, H., Lovell, C.A.K. and Schmidt, S.S. (eds.) The Measurement of Productive Efficiency: Techniques and Applications, Oxford University Press: New York.
Kumbhakar, S., Ghosh, S. and McGuckin, J.T. (1991) A generalized production frontier approach for estimating determinants of inefficiency in U.S. dairy farms, Journal of Business and Economic Statistics, 9, 279-286.
Kumbhakar, S.C. and Lovell, C.A.K. (2000) Stochastic Frontier Analysis, Cambridge University Press.
Lee, Y.H. and Schmidt, P. (1993) A production frontier model with flexible temporal variation in technical efficiency, in Fried, H., Lovell, C.A.K. and Schmidt, S.S. (eds.) The Measurement of Productive Efficiency: Techniques and Applications, Oxford University Press: New York.
Meeusen, W. and van den Broeck, J. (1977) Efficiency estimation from Cobb-Douglas production functions with composed error, International Economic Review, 18(2), 435-444.
Mundlak, Y. (1961) Empirical production functions free of management bias, Journal of Farm Economics, 43, 44-56.
Orea, L., Roibás, D. and Wall, A. (2004) Choosing the technical efficiency orientation to analyze firms' technology. A model selection test approach, Journal of Productivity Analysis, 22(1), 51-71.
Orea, L. and Kumbhakar, S. (2004) Efficiency measurement using a stochastic frontier latent class model, Empirical Economics, 29, 169-183.
Reifschneider, D. and Stevenson, R. (1991) Systematic departures from the frontier: a framework for the analysis of firm inefficiency, International Economic Review, 32, 715-723.
Reinhard, S., Lovell, C.A.K. and Thijssen, G. (1999) Econometric estimation of technical and environmental efficiency: an application to Dutch dairy farms, American Journal of Agricultural Economics, 81(1), 44-60.
Schmidt, P. and Sickles, R. (1984) Production frontier and panel data, Journal of Business and Economics Statistics, 2, 367-374.
Tsionas, E.G. (2002) Stochastic frontier models with random coefficients, Journal of Applied Econometrics, 17, 127-147.
Wang, H.J. (2002) Heteroscedasticity and non-monotonic efficiency effects of a stochastic frontier model, Journal of Productivity Analysis, 18, 241-253.
Wang, H.J. and Schmidt, P. (2002) One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels, Journal of Productivity Analysis, 8, 129-144.
Downloads
Published
How to Cite
Issue
Section
License
The works published in this journal are subject to the following terms:
1. Oviedo University Press (the publisher) retains the property rights (copyright) of published works, and encourages and enables the reuse of the same under the license specified in paragraph 2.
© Ediuno. Ediciones de la Universidad de Oviedo / Oviedo University Press
2. The works are published in the online edition of the journal under a Creative Commons Attribution-Non Commercial-Non Derives 3.0 Spain (legal text). You can copy, use, distribute, transmit and publicly display, provided that: i) you cite the author and the original source of publication (journal, publisher and URL of the work), ii) they are not used for commercial purposes, iii) mentions the existence and specifications of this license.
3. Conditions of self-archiving. The author can archive the post-print version of the article (publisher’s version) on the author’s personal website and/or on the web of the institution where he belong, including a link to the page of the journal and putting the way of citation of the work. Economics and Business Letters and its URL https://reunido.uniovi.es/index.php/EBL/index are the only authorized source for correctly giving the reference of the publisher’s version in every mention of the article.
