Technical Efficiency and Productivity Potential of Firms Using a Stochastic Metaproduction Frontier

George Battese, D.S. Prasada Rao () and Dedi Walujadi

No 2001/08, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: This paper presents an empirical study of the technical efficiencies of firms in the Indonesian garment industry using panel data from the annual Census of Manufacturing Industries during 1990 to 1995. Different stochastic frontier models are used for firms in five different regions of Indonesia because of differing technologies involved. However, a stochastic metaproduction frontier is applied to obtain alternative estimates for the technical efficiencies of firms in the different regions. The mean productivity potential of firms in a given region is also estimated, using a decomposition result obtained by using both the regional and the metaproduction frontiers. The technical inefficiency effects in the stochastic frontiers are assumed to have the time-varying structure proposed by Battese and Coelli (1992).

Keywords: Technical efficiency; stochastic frontier; panel data; metaproduction frontiers (search for similar items in EconPapers)
Pages: 21
Date: 2001
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Citations: View citations in EconPapers (9)

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