Welfare Consequences of Information Aggregation and Optimal Market Size

William E. Griffiths () and Gholamreza Hajargasht ()
Additional contact information
William E. Griffiths: Department of Economics, University of Melbourne, http://www.findanexpert.unimelb.edu.au/display/person7036

Department of Economics - Working Papers Series from The University of Melbourne

Abstract: We consider mostly Bayesian estimation of stochastic frontier models where one-sided inefficiencies and/or the idiosyncratic error term are correlated with the regressors. We begin with a model where a Chamberlain-Mundlak device is used to relate a transformation of time-invariant effects to the regressors. This basic model is then extended in several directions: First an extra one-sided error term is added to allow for time-varying efficiencies. Next, a model with an equation for instrumental variables and a more general error covariance structure is introduced to accommodate correlations between both error terms and the regressors. Finally, we show how the analysis can be extended to a nonparametric technology using Bayesian penalised splines. An application of the first and second models to Philippines rice data is provided. A limited Monte Carlo experiment is used to investigate the consequences of ignoring correlation between the effects and the regressors, and choosing the wrong functional form for the technology.

Keywords: Technical Efficiency; Penalised Splines; Gibbs Sampling (search for similar items in EconPapers)
JEL-codes: C11 C12 C23 D24 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2015-01
New Economics Papers: this item is included in nep-ecm, nep-ore and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://fbe.unimelb.edu.au/__data/assets/pdf_file/0 ... gasht-Jan-2-2015.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:1190

Access Statistics for this paper

More papers in Department of Economics - Working Papers Series from The University of Melbourne Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Dandapani Lokanathan ().