Imposing Weak Monotonicity on Parametric Distance Function Estimations

Sergio Perelman and Daniel Santín

No 2008/02, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: The technology set involved in the estimation of a production frontier theoretically implies monotonicity in outputs. This is because an efficient firm cannot reduce the vector of outputs holding fixed the vector of inputs while it still belongs to the frontier. Very often, however, this hypothesis is violated in empirical studies dealing with the estimation of parametric distance functions. We propose an approach allowing the easy imposition of weak monotonicity on outputs in this context together with an illustrative example in the educational sector.

Keywords: technical efficiency; stochastic frontier; distance function; education (search for similar items in EconPapers)
Pages: 17
Date: 2008
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