Consistent Estimation of Technical and Allocative Efficiencies for a Semiparametric Stochastic Cost Frontier with Shadow Input Prices

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Title:	Consistent Estimation of Technical and Allocative Efficiencies for a Semiparametric Stochastic Cost Frontier with Shadow Input Prices
Authors:	Huang, T.H.;K.C. Chen;C.H. Lin;M.T. Chung
Keywords:	Semiparametric cost frontier;Monte Carlo simulations;Shadow prices;Technical efficiency;Allocative efficiency
Date:	2014-04
Issue Date:	2018-06-21 12:11:08 (UTC+8)
Abstract:	Conventional parametric stochastic cost frontier models are likely to suffer from biased inferences due to misspecification and the ignorance of allocative efficiency (AE). To fill up the gap in the literature, this article proposes a semiparametric stochastic cost frontier with shadow input prices that combines a parametric portion with a nonparametric portion and that allows for the presence of both technical efficiency (TE) and AE. The introduction of AE and the nonparametric function into the cost function complicates substantially the estimation procedure. We develop a new estimation procedure that leads to consistent estimators and valid TE and AE measures, which are proved by conducting Monte Carlo simulations.
Relation:	Journal of Productivity Analysis 41(2), p.307-320
DOI:	10.1007/s11123-012-0316-9
Appears in Collections:	[Graduate Institute & Department of Banking and Finance] Journal Article

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