Efficiency of convention hotels in Thailand: An analysis using stochastic frontier with copula

Kasidit Poonkham () and Songsak Sriboonchitta
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Kasidit Poonkham: Chiang Mai University

The Empirical Econometrics and Quantitative Economics Letters, 2013, vol. 2, issue 3, 103 – 110

Abstract: The purpose of the study concerns efficiency Analysis of Convention Hotels in Thailand by using Stochastic Frontier with Copula. To begin with the Standard Stochastic Frontier Model (SFA), it is generally formulated hypothesis in order to determine two independent random variables between U (represents technical inefficiency) and V (represents uncontrollable disturbances) of the composite error W=V-U . In addition to applying the copula approach to statistical model, the Standard Stochastic Frontier is able to make possible to create estimation of the relationship between the variables U and V. Parameterization of this structure allows the extension of the association between the variables U and V to be measured of using data. Moreover, the independence between U and V, a special case, can be tested. The dependent error components of Stochastic Frontier with copula are less restrictive than the Standard Stochastic frontier and also more attractive to statistical grounds. The results show that copula families which are the most suitable to data process are Gaussian copula; seeing that, the non-linear relationships between and show dependence between U and V for the data. The results of the analysis show that the large convention Hotels which have a large number of conference accommodations are the highest efficiency than the smaller convention hotels. This study suggests that sharing the operational knowledge among relevant groups will be able to help the development of the operational technologies and can increase the efficiency of the convention hotels in Thailand as well.

Keywords: Stochastic frontier; Copula; Hotel efficiency (search for similar items in EconPapers)
Date: 2013
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