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Heteroscedasticity and non-monotonic efficiency effects of a stochastic frontier model

Hung-Jen Wang ()

MPRA Paper from University Library of Munich, Germany

Abstract: We consider a model that provides flexible parameterizations of the exogenous influences on inefficiency. In particular, we demonstrate the model's unique property of accommodating non-monotonic efficiency effect. With this non-monotonicity, production efficiency no longer increases or decreases monotonically with the exogenous influence; instead, the relationship can shifts within the sample. Our empirical example shows that variables can indeed have non-monotonic effects on efficiency. Furthermore, ignoring non-monotonicity is shown to yield an inferior estimation of the model, which sometimes results in opposite predictions concerning the data.

Keywords: stochastic frontiers; heteroscedasticity; non-monotonic effects (search for similar items in EconPapers)
JEL-codes: C16 C24 Q12 (search for similar items in EconPapers)
Date: 2002-04
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Published in Journal of Productivity Analysis 18.3(2002): pp. 241-253

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Journal Article: Heteroscedasticity and Non-Monotonic Efficiency Effects of a Stochastic Frontier Model (2002) Downloads
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