Measuring Technical Efficiency in the Stochastic Varying Coefficient Frontier Model

Giannis Karagiannis () and Vangelis Tzouvelekas

No 725, Working Papers from University of Crete, Department of Economics

Abstract: Due to the assumption that the best practice methods refer to each input separately instead of the whole set of inputs used by a firm, the benchmark technology as defined in the stochastic varying coefficient frontier model may be infeasible and theoretically improper whenever the maximum response coefficients are not coming from the same production unit. To overcome this problem we suggest an alternative procedure for measuring output-oriented and input-specific technical efficiency inspired from the maximum likelihood formulation of the non-neutral frontier model. The empirical results indicate that there are significant differences between the two procedures in terms of both the estimated efficiency scores (i.e., their means as well as of their frequency distribution) and the ranking of firms.

Keywords: stochastic varying coefficient frontier model; input specific technical efficiency; olive farming; Greece (search for similar items in EconPapers)
JEL-codes: C33 D21 D24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff
Date: 2007-05-29

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Related works:
Journal Article: Measuring technical efficiency in the stochastic varying coefficient frontier model (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:crt:wpaper:0725

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