The estimation of profit efficiency

Yongseung Han () and Myeong Hwan Kim

Applied Economics Letters, 2018, vol. 25, issue 15, 1066-1070

Abstract: This article discusses a way of solving the ‘Greene Problem’ that has been termed for a technical difficulty in estimating a profit system with technical and allocative inefficiencies. As the ‘Greene Problem’ is due to the existence of unobserved technical inefficiency interactive in a nonlinear form, the article proposes a use of homogeneity in technology to untangle the nonlinear form, enabling the estimation of a profit system as well as the identification of the source of inefficiencies.

Date: 2018
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DOI: 10.1080/13504851.2017.1397841

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