A Note on Parameterizing Input Distance Functions: Does the Choice of a Functional Form Matter?

Rolf Färe () and Michael Vardanyan
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Rolf Färe: University of Arkansas

No 2014-EQM-03, Working Papers from IESEG School of Management

Abstract: We use a Monte Carlo experiment to compare the quadratic and translog functional forms in terms of their ability to approximate known frontiers that possess convex curvature. Unlike some of the existing simulation studies that have studied this topic, we find that both functional forms provide a reliable approximation to a true frontier. Our results lend support to existing explanations concerning the translog form’s innate propensity to yield convex, rather than concave, frontier estimates.

Keywords: Distance Functions; Parameterization (search for similar items in EconPapers)
JEL-codes: C63 D24 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-04
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Related works:
Journal Article: A note on parameterizing input distance functions: does the choice of a functional form matter? (2016)
Working Paper: A note on parameterizing input distance functions: does the choice of a functional form matter? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:e201403

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