A Recursive Thick Frontier Approach To Estimating Production Efficiency

Rien Wagenvoort and Paul Schure ()
Additional contact information
Rien Wagenvoort: European Investment Bank, Luxembourg

No 503, Econometrics Working Papers from Department of Economics, University of Victoria

Abstract: We introduce a new panel data estimation technique for cost and production functions: the Recursive Thick Frontier Approach (RTFA). RTFA has two advantages over existing thick frontier methods. First, technical inefficiency is allowed to be dependent on the explanatory variables of the frontier model. Secondly, no distributional assumptions are imposed on the inefficiency component of the error term. We show by means of simulation experiments that RTFA can outperform the popular stochastic frontier approach (SFA) and the “within” OLS estimator for realistic parameterisations of the productivity model.

Keywords: Technical Efficiency; Efficiency Measurement; Frontier Production Functions; Recursive Thick Frontier Approach (search for similar items in EconPapers)
JEL-codes: C15 C23 C50 D2 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2005-03-11
New Economics Papers: this item is included in nep-bec, nep-ecm and nep-eff
Note: ISSN 1485-6441
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.uvic.ca/socialsciences/economics/_asse ... ometrics/ewp0503.pdf (application/pdf)

Related works:
Journal Article: A Recursive Thick Frontier Approach to Estimating Production Efficiency* (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vic:vicewp:0503

Access Statistics for this paper

More papers in Econometrics Working Papers from Department of Economics, University of Victoria PO Box 1700, STN CSC, Victoria, BC, Canada, V8W 2Y2. Contact information at EDIRC.
Bibliographic data for series maintained by Kali Moon ().