Testing for Productive Efficiency with Errors-in-Variables: with an application to the Dutch electricity sesctor

Timo Kuosmanen and Thierry Post

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: We develop a nonparametric test of productive efficiency that accounts for the possibility of errors-in-variables. The test allows for statistical inference based on the extreme value distribution of the L?? norm. In contrast to the test proposed by Varian, H (1985): 'Nonparametric Analysis of Optimising Behaviour with Measurement Error, Journal of Econometrics 30, 445-458, our test can be computed using simple enumeration algorithms or linear programming. An empirical application for the Dutch electricity sector illustrates the proposed test procedure.

Keywords: data envelopment analysis (DEA); errors-in-variables; extreme value theory; hypothesis testing; nonparametric production analysis (search for similar items in EconPapers)
JEL-codes: C14 G3 M (search for similar items in EconPapers)
Date: 2001-04-19
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Citations: View citations in EconPapers (1)

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