Endogeneity Problems in the Estimation of Multi-Output Technologies

David Roibás () and Carlos Arias ()

No 2004/06, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: Empirical representations of multi-output technology use either quantities or ratios of outputs as explanatory variables. These specifications raise questions about the existence of endogeneity problems in the estimation of multi-output technology. We contribute to the analysis of this issue by distinguishing between two sources of endogeneity: endogeneity of the production plan and unobservability of the production plan (error in variables). Using Monte Carlo simulation, we explore the consequences of endogeneity for two empirical representations of multi-output technologies: the distance function and the transformation function. Particularly, we analyze the role played by the degree of correlation among output disturbances.

Keywords: multi-output production process; output oriented distance functions; transformation function; output endogeneity; instrumental variables; Monte Carlo (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (7)

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