Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach

Cinzia Daraio () and Leopold Simar

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

Abstract: This paper proposes a general formulation of a nonparametric frontier model introducingexternal environmental factors that might influence the production process butare neither inputs nor outputs under the control of the producer. A representation isproposed in terms of a probabilistic model which defines the data generating process.Our approach extends the basic ideas from Cazals, Florens and Simar (2002) to thefull multivariate case. We introduce the concepts of conditional efficiency measure andof conditional efficiency measure of order-m. Afterwards we suggest a practical wayfor computing the nonparametric estimators. Finally, a simple methodology to investigatethe influence of these external factors on the production process is proposed.Numerical illustrations through some simulated examples and through a real data seton Mutual Funds show the usefulness of the approach.

Keywords: production function; frontier; nonparametric estimation; environmental factors; robust estimation. (search for similar items in EconPapers)
Date: 2003-12-19
New Economics Papers: this item is included in nep-cmp
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ssa:lemwps:2003/17

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