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On measuring economic efficiency
Author(s) -
Kalirajan K. P.
Publication year - 1990
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.3950050106
Subject(s) - allocative efficiency , econometrics , production function , production (economics) , profit (economics) , economics , function (biology) , measure (data warehouse) , distribution (mathematics) , production–possibility frontier , economic efficiency , mathematics , computer science , mathematical optimization , microeconomics , data mining , mathematical analysis , evolutionary biology , biology
This paper considers a system consisting of a production frontier and factor share equations to measure firm‐specific technical efficiency and input‐specific allocative efficiency simulataneously. In estimating the system as a whole, the joint distribution of all errors in the equations is used. This is more efficient than using the marginal distribution of a function of the errors as one does by estimating either the profit function of the production function alone. The workability of the method is illustrated by applying it to farm‐level data from Philippines agriculture.