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Measuring technical efficiency in the stochastic varying coefficient frontier model
Author(s) -
Karagiannis Giannis,
Tzouvelekas Vangelis
Publication year - 2009
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2009.00386.x
Subject(s) - ranking (information retrieval) , benchmark (surveying) , frontier , econometrics , set (abstract data type) , production–possibility frontier , economics , production model , production (economics) , mathematics , mathematical optimization , computer science , microeconomics , archaeology , geodesy , machine learning , history , programming language , geography
Due to the assumption that the best practice methods refer to each input separately instead of the whole set of inputs used by a firm, the benchmark technology as defined in the stochastic varying coefficient frontier model may be infeasible and theoretically improper whenever the maximum response coefficients are not coming from the same production unit. To overcome this problem, we propose alternative measures of output‐oriented and single‐factor technical efficiencies inspired from the maximum likelihood formulation of the nonneutral frontier model. The empirical results indicate that there are significant differences between the two in terms of the estimated efficiency scores but not significant differences we detected in terms of the efficiency ranking.