Estimating a Mixture of Efficiency Indices

Subal Kumbhakar, Luis Orea, Ana Rodriguez-Alvarez and Mike Tsionas

No 2003/08, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: In this paper we estimate parametric input and output distance functions as well as a mixture of input and output distance functions. The main advantage of the mixing model is that it lets the data determine the orientation of technical inefficiency, which is an open problem in efficiency analysis. Since estimates of technical inefficiency from the input and output distance functions are not directly comparable, we develop cross-indices that can be used to compute input (output) technical inefficiency from the estimates of output (input) distance function. These cross-indices are especially useful in the mixture model in which both the input and output distance functions are simultaneously estimated. The proposed technique is applied to a panel data on European Railways (1970-1994).

Keywords: Distance functions; technical inefficiency; railways (search for similar items in EconPapers)
Pages: 29
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:oeg:wpaper:2003/08

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