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Full-Text Articles in Social and Behavioral Sciences
Estimating Technical Efficiency In Micro Panels, Qu Feng, William C. Horrace
Estimating Technical Efficiency In Micro Panels, Qu Feng, William C. Horrace
Economics - All Scholarship
Bootstrap confidence intervals on fixed-effects efficiency estimates in micro panels exhibit low coverage probabilities. We propose an alternative efficiency measure involving the mean of the firm effects. With the same estimated efficiency ranks as the traditional measure, its corresponding bootstrap confidence intervals have better coverage probabilities.
A Monte Carlo Study Of Ranked Efficiency Estimates From Frontier Models, William C. Horrace, Seth Richards-Shubik
A Monte Carlo Study Of Ranked Efficiency Estimates From Frontier Models, William C. Horrace, Seth Richards-Shubik
Economics - All Scholarship
Parametric stochastic frontier models yield firm-level conditional distributions of inefficiency that are truncated normal. Given these distributions, how should one assess and rank firm-level efficiency? This study compares the techniques of estimating (a) the conditional mean of inefficiency and (b) probabilities that firms are most or least efficient. Monte Carlo experiments suggest that the efficiency probabilities are easier to estimate (less noisy) in terms of mean absolute percent error when inefficiency has large variation across firms. Along the way we tackle some interesting problems associated with simulating and assessing estimator performance in the stochastic frontier model.