Neoclassical versus frontier production models? Testing for the skewness of regression residuals

Timo Kuosmanen and Mogens Fosgerau

MPRA Paper from University Library of Munich, Germany

Abstract: The empirical literature on production and cost functions is divided into two strands: 1) the neoclassical approach that concentrates on model parameters, 2) the frontier approach that decomposes the disturbance term to a symmetric noise term and a positively skewed inefficiency term. We propose a theoretical justification for the skewness of the inefficiency term, arguing that this skewness is the key testable hypothesis of the frontier approach. We propose to test the regression residuals for skewness to distinguish the two competing approaches. Our test builds directly upon the asymmetry of regression residuals and does not require any prior distributional assumptions.

Keywords: Firms and production; Frontier estimation; Hypotheses testing; Production function; Productive efficiency analysis (search for similar items in EconPapers)
JEL-codes: A10 C12 C14 D24 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/24208/1/MPRA_paper_24208.pdf original version (application/pdf)

Related works:
Journal Article: Neoclassical versus Frontier Production Models? Testing for the Skewness of Regression Residuals* (2009)
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:pra:mprapa:24208

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().