The distribution and heterogeneity of technical efficiency within industries: An empirical assessment

Michael Fritsch () and Andreas Stephan

No 2004/12, Freiberg Working Papers from TU Bergakademie Freiberg, Faculty of Economics and Business Administration

Abstract: This paper analyzes the distribution of technical efficiency within manufacturing industries. Using a representative sample of 35,000 firms in 255 industries of the German cost structure census, technical efficiencies are estimated by applying a deterministic frontier production function with firm-specific fixed effects. A new measure is also introduced for characterizing the extent of heterogeneity within an industry that is robust with regard to extreme values of a few small firms. It was found that the level of intra-industry heterogeneity is mainly determined by an industries' average technical efficiency, average firm size, capital intensity and the rate of new firm formation. Most strikingly, we find that in about 95 percent of industries the distribution of technical efficiency is skewed to the right, not to the left as is commonly assumed.

Keywords: Technical efficiency; heterogeneity; deterministic production function frontier; Technische Effizienz; Heterogenität; Deterministische Frontier-Produktionsfunktion (search for similar items in EconPapers)
JEL-codes: D24 L10 L11 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: The Distribution and Heterogeneity of Technical Efficiency within Industries: An Empirical Assessment (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tufwps:200412

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