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Estimating efficiency in a spatial autoregressive stochastic frontier model

Levent Kutlu

Economics Letters, 2018, vol. 163, issue C, 155-157

Abstract: The spatial autoregressive stochastic frontier model of Glass et al.(2016) is based on distributional assumptions on two-sided and one-sided error terms. After estimating the model parameters, the efficiency estimates need to be corrected due to the presence of spatial autoregressive term in their model. Glass et al.(2016) estimate the corrected efficiencies by employing ideas from a distribution-free method on the efficiency estimation, which may be sensitive to outliers. We propose an alternative way to correct efficiency estimates that is in line with the distribution-based methods.

Keywords: Efficiency; Spatial autoregression; Stochastic frontier (search for similar items in EconPapers)
JEL-codes: C23 D24 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ecolet:v:163:y:2018:i:c:p:155-157