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A BIAS-CORRECTED NONPARAMETRIC ENVELOPMENT ESTIMATOR OF FRONTIERS

Luiza Badin () and Leopold Simar ()

Econometric Theory, 2009, vol. 25, issue 05, 1289-1318

Abstract: In efficiency analysis, the production frontier is defined as the set of the most efficient alternatives among all possible combinations in the input-output space. The nonparametric envelopment estimators rely on the assumption that all the observations fall on the same side of the frontier. The free disposal hull (FDH) estimator of the attainable set is the smallest free disposal set covering all the observations. By construction, the FDH estimator is an inward-biased estimator of the frontier.

Date: 2009
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