Technical efficiency with state-contingent production frontiers using maximum entropy estimators

Pedro Macedo (), Elvira Silva and Manuel Scotto

Journal of Productivity Analysis, 2014, vol. 41, issue 1, 140 pages

Abstract: Although the theory of state-contingent production is well-established, the empirical implementation of this approach is still in an infancy stage. The possibility of finding a large number of states of nature, few observations per state and models affected by collinearity have led some researchers to claim the urgent need to develop robust estimation techniques. In this paper, we investigate the performance of some maximum entropy estimators to assess technical efficiency with state-contingent production frontiers. The methodological discussion and the simulation study provided in the paper reveal some of the potential of these estimators. Small mean squared error loss and small differences between the true and the estimated mean of technical efficiency show that the maximum entropy can be a powerful tool in the estimation of state-contingent production frontiers. Copyright Springer Science+Business Media, LLC 2014

Keywords: Maximum entropy; State-contingent production; Technical efficiency; C13; C15 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jproda:v:41:y:2014:i:1:p:131-140

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DOI: 10.1007/s11123-012-0314-y

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