An econometric approach to estimating support prices and measures of productivity change in public hospitals

C. O’Donnell () and K. Nguyen
Authors registered in the RePEc Author Service: Christopher John O'Donnell

Journal of Productivity Analysis, 2013, vol. 40, issue 3, 323-335

Abstract: In industry sectors where market prices for goods and services are unavailable, it is common to use estimated output and input distance functions to estimate rates of productivity change. It is also possible, but less common, to use estimated distance functions to estimate the normalised support (or efficient) prices of individual inputs and outputs. A problem that arises in the econometric estimation of these functions is that more than one variable in the estimating equation may be endogenous. In such cases, maximum likelihood estimation can lead to biased and inconsistent parameter estimates. To solve the problem, we use linear programming to construct a quantity index. The distance function is then written in the form of a conventional stochastic frontier model where the explanatory variables are unambiguously exogenous. We use this approach to estimate productivity indexes, measures of environmental change, levels of efficiency, and support prices for a sample of Australian public hospitals. Copyright Springer Science+Business Media, LLC 2013

Keywords: Endogeneity; Distance functions; Shadow prices; Efficient prices; Total factor productivity; Environmental change; Technical efficiency; Scale efficiency; C43; D24; I12; I18 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (18)

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Working Paper: An Econometric Approach To Estimating Support Prices And Measures Of Productivity Change In Public Hospitals (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jproda:v:40:y:2013:i:3:p:323-335

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DOI: 10.1007/s11123-012-0312-0

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