Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract Advanced efficiency measurement methods usually fall within Stochastic Frontier Analysis (SFA), Data Envelopment Analysis (DEA), or their derivatives. Although SFA has some theoretical advantages, it has been criticized for relying on arbitrary and potentially restrictive assumptions about model specification. One strand of the literature suggests the use of nonparametric SF models to cope with the issue. We follow an alternative path and demonstrate that it is possible to deal with specification uncertainty and potentially restrictive assumptions while maintaining the advantages of the parametric approach. First, we develop a flexible stochastic model based on generalized t and generalized beta of second kind distributions, which encompasses virtually all known parametric SFA specifications. Second, we apply Bayesian inference methods, which are less restrictive than those used so far, and propose feasible approximate alternatives based on maximum likelihood. Third, we pool results from alternative specifications using model averaging. Our focus is on the distributional assumptions regarding the compound error in SFA since this aspect has not been addressed so far in a satisfactory way. However, extensions to other elements of specification uncertainty, like the choice of the frontier functional form, are straightforward. Finally, we show simulations results and analyze two well-researched datasets, for which we obtain probabilistic (density) estimates of efficiency scores that take into account the estimation error and model uncertainty in a formally justified manner. PubDate: 2022-05-19
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract We study the performance of the banking system in the Eurozone over the period 2006–2017 as measured by total factor productivity growth (TFPG) and its components. We find that Total Factor Productivity growth for the median euro area bank decreased from around 2.6% in 2007 to below 1.7% in 2017, driven mainly by a decline in technical efficiency. In addition, we control for unobserved heterogeneity across banks and disentangle persistent and time-varying inefficiency in the banking sector. This modelling choice is important to avoid distorted and biased inefficiency estimates. We find that cost efficiency in the euro area banking sector amounted to around 84% on average over the 2006 to 2017 period. The largest part of bank inefficiency is persistent, suggesting that structural long-term factors (such as location, client structure, macroeconomic environment, regulation, etc.) play a bigger role than time-varying factors. PubDate: 2022-05-07
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract In this paper, we extend the four-component stochastic frontier model to allow for global spatial dependence via the endogenous spatial autoregressive variable. Our proposed model is more general than the model considered by (Glass et al., 2016) in the sense that we include a random effect as well as a permanent efficiency component. With the spatial autoregressive specification, our model is able to capture the asymmetric efficiency spillovers and also decompose the persistent/transient inefficiencies into direct and indirect efficiencies. Moreover, we also investigate the marginal effects of the exogenous variables on the persistent/transient efficiency. We suggest a maximum simulated likelihood method to estimate the frontier parameters of the model, and we predict the efficiencies using the simulated estimator. Monte Carlo simulations reveal that the suggested estimator performs well in finite samples. An empirical application is considered to illustrate the usefulness of our proposed model and method. PubDate: 2022-04-25
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract Recently, the elasticity of response measures revealing the marginal characteristics of efficient frontiers have been developed and generalized for different types of DEA production technologies. In theory, the elasticity measures can be calculated for the units on the efficient frontier that satisfy a selective radial efficiency assumption. This corresponds to a subset of the evaluated units. In this research, we propose to extend the elasticity measurement to the entire production possibility set (technology) by stratifying the units to different levels of efficient frontiers. The stratification idea is inspired by the commonly known context-dependent DEA based on the exclusion of efficient units at each iteration and obtaining multiple levels of frontiers. We build the proposed methodology on the idea that a DEA technology theoretically consists of several frontiers and calculating elasticity measures on all frontiers may provide additional information on the returns-to-scale (RTS) characteristics of all the units whether they are on the first-level frontier or not. The proposed methodology is presented in an empirical application using the Farm Accountancy Data Network (FADN) data of the agricultural farms operating in the Aegean Region of Turkey. The results reveal that the proposed method enables us to obtain a wider perspective on the RTS characterizations of DEA production technologies. PubDate: 2022-04-25
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract We consider goodness–of–fit tests for the distribution of the composed error in Stochastic Frontier Models. The proposed test statistic utilizes the characteristic function of the composed error term, and is formulated as a weighted integral of properly standardized data. The new test statistic is shown to be consistent and computationally convenient. Simulation results are presented whereby resampling versions of the new tests are compared to classical goodness–of–fit methods. PubDate: 2022-03-14
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This research defines the energy intensity target of the contemporaneous metafrontier and global metafrontier in order to assist decision-makers at identifying the efficient energy intensity target. We find that the sources of energy intensity improvement under the global metafrontier are due to three reasons: managerial inefficiency, technology gap inefficiency, and global technology gap inefficiency. In addition, the measurement of the energy intensity target also extends to that of energy productivity changes. The research applies data envelopment analysis (DEA) to empirically study Brazil, Russia, India, China, and South Africa (BRICS) and the Group of Seven (G7) countries and demonstrates that the BRICS group exhibits a larger scope for energy intensity improvement than the G7 group, but that both groups should still pay greater attention to energy technology promotion to improve energy intensity. A win–win strategy for the two groups to achieve this is by fully realizing energy technology transfer from high-tech to low-tech countries. PubDate: 2022-03-14
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This paper investigates the efficiency of Italian hospitals and how their performances have changed over the years 2007–2016, characterized by the great economic recession and budget constraints. We apply the Benefit of Doubt (BoD) approach to determine a composite index that considers the multi-dimensionality of the hospital outcome to be used as main output in a metafrontier production function based on a stochastic frontier framework. The efficiency score distribution is then used to construct a Theil index in order to compare, over time, the inequality of the estimated efficiency between hospitals, both within and between regions. The main findings show that the primary source of inefficiency comes from managerial inefficiency especially for hospitals located in southern regions. A clear and persistent North-South gap in efficiency performances of hospitals has been found along with an increase in the inequality in terms of efficiency between the areas of the country mostly determined by between region inequality. PubDate: 2022-03-11
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract Applications of efficiency and productivity analysis in which some inputs and outputs are given in the form of percentages, averages and other types of ratio measures are sufficiently common in the literature. In two recent papers, the authors developed the variable and constant returns-to-scale technologies with both volume and ratio types of inputs and outputs, referred to as the R-VRS and R-CRS technologies. These technologies are generally nonconvex and have a complex structure. In this paper we explore this in detail. We show that the R-VRS technology can be stated as the union of a finite number of specially constructed standard VRS technologies. Similarly, the R-CRS technology in which all ratio inputs and outputs are of the fixed type, which are typically used to represent environmental and quality factors, can be stated as the union of a finite number of partial polyhedral cones. We show that these results have important theoretical, including conceptual, implications. PubDate: 2022-03-09 DOI: 10.1007/s11123-022-00631-6
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract Evaluating shadow prices is critical in devising environmental regulatory policies for pollutants. Compared to traditional frontier estimation methods, this paper uses a recently developed data-driven approach named convex quantile regression, taking both the noise and inefficiency into account and estimating the shadow prices locally. This paper is the first work applying convex quantile regression to jointly evaluate shadow prices of CO2, SO2, and NOx produced by U.S. coal power plants from 2010 to 2017. During this period, five major regulatory provisions were implemented for U.S. coal power plants. We find that the shadow prices of CO2, SO2, and NOx increased from 2010 to 2017. The increase in the shadow price of CO2 is mainly due to the increase in electricity prices, while the increase in shadow prices of SO2 and NOx is mainly due to the successful emission reductions. Moreover, the results show that the CSARP and CSARP Update have significantly increased the shadow prices of SO2 and NOx. However, the relatively lower market allowance prices compared to the shadow prices indicate that society could benefit more if the government could increase the market prices of the pollutants to be more close to the shadow prices. PubDate: 2022-02-15 DOI: 10.1007/s11123-022-00629-0
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This study estimates the technical efficiency measures of maize producing farm households in Ethiopia using stochastic frontier (SF) panel models that take different approaches to model firm heterogeneity. The efficiency measures are found to vary depending on how the estimation model treats both unobserved and observed firm heterogeneity. Estimates from the ‘true’ random effects (TRE) models that treat firm effects as heterogeneity are found to be identical to those from pooled SF models. Those results differ from the ones generated from the basic random effects (RE) models that treat firm effects as part of overall technical inefficiency. The more flexible generalised ‘true’ random effects (GTRE) model that splits the error term into firm effects, persistent inefficiency, transient inefficiency, and a random noise component indicates the presence of higher levels of persistent inefficiency than transient inefficiency. The basic truncated-normal RE model and heteroscedastic RE model yields similar efficiency estimates. The GTRE model predict persistent efficiency measures similar to those from the basic RE and flexible RE model with environmental variables incorporated in the variance function as well as in the deterministic production frontier. These results imply that the RE and GTRE panel models provide reliable efficiency estimates for our data compared to the TRE models. All the estimated SF models generate comparable production function parameters in terms of magnitude and sign. Overall, the results underscore the importance of scrutinising stochastic frontier models for their reliability of analytical results before drawing policy inferences. PubDate: 2022-02-10 DOI: 10.1007/s11123-022-00627-2
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract The Debreu–Farrell measure of technical efficiency is widely used to benchmark firm performance. A limitation of this measure is that it is orientation restricted and evaluates the performance of a decision-making unit in an explicit direction relative to the best-practice frontier and not the most productive point on the frontier. Therefore, the measure does not provide policy insight on how to direct decision-making units to achieve the best possible productivity level. Taking a departure from conventional nonparametric benchmarking studies, this study benchmarks the performance of commercial farm businesses in the Western Australia’s wheatbelt region using total factor productivity efficiency (‘TFP efficiency’) and compares the results to those when the conventional technical efficiency measures are applied. We find that the two measures of firm performance differ and are influenced by different sources of firm heterogeneity. Therefore, derived policy insights and prescriptions also differ. This is an important insight that policymakers and practitioners need to be aware of. PubDate: 2022-02-09 DOI: 10.1007/s11123-022-00628-1
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract We propose a new methodology to estimate empirically the input price-induced technical change and total factor productivity (TFP) growth in China. Our primary goal is to test Hicks’ induced innovation hypothesis by examining whether technical change in China has been induced by sharp increase in input prices that have accompanied its rapid economic growth. Utilizing the idea of a firm’s two-stage optimization problem, we develop a new parametric form of the variable profit function wherein the derived input demand and output supply functions can be easily constrained to be regular, and the functional structure is parsimonious in the number of parameters. Applying this methodology to Chinese time series data for 1986–2017, we find that not only is wage-induced innovation significant and quantitatively important, but also that it substantially buffered a decline in TFP growth before 2006 that would otherwise be substantial. Overall, we conclude that China’s economic growth is predominantly driven by wage-induced innovation along with massive injection of heavily subsidized physical inputs in public works and huge investment in industrial sectors. PubDate: 2022-01-27 DOI: 10.1007/s11123-021-00626-9
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This article provides a generalization of the materials balance-based production model introduced by Coelli et al. (2007). Based on this, some new environmental efficiency (EE) measures are presented. The Coelli et al. (2007) EE measure and its extension by Rødseth (2016) produce biased efficiency estimates if the material flow coefficients (MFCs) are heterogeneous across decision-making units and non-discretionary. Furthermore, the Coelli et al. (2007) measure fails to reward emission reductions by emission control. To overcome these shortcomings, this paper proposes production models which allow for heterogeneous MFCs reflecting differences of external environmental factors or non-controllable heterogeneities in inputs and outputs, and which properly take into account emission abatement activities. Based on this, EE measures are provided and decomposed into (i) a part reflecting emission control efficiency (ECE), (ii) a part measuring material input efficiency (MIE), and (iii) a part reflecting the efficient allocation between material and non-material inputs (environmental allocative efficiency, EAE). The approach is illustrated by an empirical application to arable farming in Austria utilizing data from 90 farms for the year 2011. Soil erosion is considered an undesirable output and land a material input. The average EE, ECE, MIE, and EAE are 0.53, 0.96, 0.69, and 0.79, respectively. The results indicate that actual output can be potentially achieved with 47% less soil loss. Most of the potential to improve EE is due to differences in MIE and EAE. Removing inefficiencies in the implementation of existing, subsidized erosion controls allows soil loss to be reduced by 4%. PubDate: 2022-01-19 DOI: 10.1007/s11123-021-00623-y
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This paper measures and compares the World Bank regions’ opportunity sets to promote ease of doing business for the years 2010 and 2019, as well as the time period 2010–2019. We combine the theoretical framework of Verbunt et al. (2020) and the non-parametric frontier estimation approach as proposed by Van Puyenbroeck and Rogge (2020) to construct and assess (changes in) the regions’ opportunity sets and best practice frontiers. The results reveal considerable differences across World Bank regions in ease of doing business, which decrease over the period of study. By 2019, the regions have grouped into two clusters: the leading high income OECD, Europe and Central Asia, and East Asia and Pacific, and the lagging Middle East and North Africa, Latin America and the Caribbean, South Asia and Sub-Saharan Africa. The results prove to be consistent with the concept of development clustering. PubDate: 2022-01-15 DOI: 10.1007/s11123-021-00624-x
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract In this paper, we derive conditions under which merger between a number of firms within the same industry would induce a more cost efficient production of the aggregate output bundle, especially in the short-run, and show that potential cost economies from a merger can be attributed to three factors: convexity of the technology, sub-additivity of the ray short-run total cost curve, and a trade-off between reduction in the variable cost and increase in fixed cost arising from an aggregation of the fixed inputs of the merging units. We use this proposed analytical framework to evaluate the gains from various recent bank mergers in India. We employ the nonparametric method of Data Envelopment Analysis for retrospectively quantifying the potential gain from specific mergers and its components both in the short-run and in the long-run. PubDate: 2022-01-13 DOI: 10.1007/s11123-021-00625-w
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract Using firm-level panel data we analyze the misallocation of capital and labor for the Netherlands in the period 2001–2017. We use the dispersion in marginal revenue products of capital and labor to measure the extent of misallocation. Compared to a counterfactual efficient allocation we find that misallocation has had a sizable negative impact on aggregate productivity of around 14 percentage points in the period 2001–2017. Especially capital misallocation has increased over time. Exploiting a panel data error components model we find that capital misallocation has a much more permanent character than labor misallocation. Moreover, it is the permanent component of capital misallocation that has increased over time. Finally, we show that in our sample the measurement of misallocation is largely insensitive to capital adjustment costs and alternative specifications of the production function. The contribution of heterogeneous markups to observed misallocation, however, is non-negligible. PubDate: 2022-01-13 DOI: 10.1007/s11123-021-00622-z
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This study aims at evaluating the crucial effects of incorporating heterogeneities and hierarchies in the efficiency evaluation of higher education units through conducting multilevel frontier analysis. Using two sets of data on academic departments nested within faculties, and faculties within colleges of a comprehensive university in Iran, we simultaneously evaluate efficiency scores of departments, faculties, colleges, and the university. It has been shown that: (1) there is a great degree of heterogeneities among departments, faculties, and colleges of the university; (2) incorporating the heterogeneities changes efficiency scores which accordingly questions the accuracy of standard DEA and SFA efficiency estimates; (3) multilevel modelling helps to uncover huge differences in behavior and performance through decomposing overall efficiency scores into multiple measures of efficiency; and (4) departments, in comparison with faculties and colleges, play a more significant role in the overall performance of the university. Resource allocation policy implications of the findings were also discussed. PubDate: 2022-01-04 DOI: 10.1007/s11123-021-00621-0
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This paper aims to analyze environmental Total Factor Productivity (TFP) change. Indeed, innovative environmental TFP measures are introduced through convex and non convex environmental production processes. Hence, the impacts of input and output quality change on environmental productivity variation are underscored. In addition, general decomposition of the new ratio- and difference-based environmental TFP measures is proposed. Finally, an empirical example is provided to illustrate these propositions. PubDate: 2022-01-04 DOI: 10.1007/s11123-021-00620-1
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract This paper estimates the shadow price of equity for U.S. commercial banks over 2001–2018 using nonparametric local-linear estimators of the underlying cost frontier and tests the existence of “Too-Big-to-Fail” (TBTF) banks. Evidence for the existence of TBTF banks is found. We find that a negative correlation exists between the shadow price of equity and the size of banks in each year, suggesting that big banks pay less for equity than small banks. In addition, in each year there are more banks with a negative shadow price of equity in the fourth quartile based on total assets than in the other three quartiles. The data also reveal that for each year, the estimated mean shadow price of equity for the 50 largest banks is smaller than the mean price of deposits, even though equity is commonly viewed as a riskier asset than deposits. Finally, we find that the top 10 largest banks are willing to pay much more at the start of the global financial crisis and after the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 than the other periods. These results imply that these regulations are effective in reducing the implicit subsidy, at least for the top 10 largest banks. However, it is also evident that the recapitalization has imposed significant equity funding costs for the top 10 largest banks. PubDate: 2021-11-09 DOI: 10.1007/s11123-021-00619-8
Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract The paper deals with the technical efficiency evaluation under the fixed proportion technologies (FPTs) assumption where nonsubstitutable inputs and outputs are present. The recent research has shown that the conventional data envelopment analysis (DEA) models used for FPTs are biased, and when inputs and outputs are not substituted for either technological or other reasons, the models that account for nonsubstitutability need to be employed. This paper discusses a technical efficiency decomposition under FPTs and proposes two new models for quantification of contribution of various sources to overall inefficiency. The first model, called the calculation-based model, is a purely parametric model for efficiency decomposition, whereas the second model, called the adjusted CCR model, is a combination of parametric and nonparametric DEA approach. Using the models presented in the paper, the overall efficiency measure is decomposed into three main components: Farrell efficiency component, input mix efficiency component and output mix efficiency component. The selected estimators, some of them newly developed, are compared with the true efficiency levels via Monte Carlo simulations to measure the accuracy of the models. The results demonstrate that the proposed models provide sufficiently reliable results and in terms of overall efficiency are comparable with existing models for measuring efficiency in FTP conditions. PubDate: 2021-11-06 DOI: 10.1007/s11123-021-00617-w
Hybrid journal (It can contain Open Access articles)
[2469 journals]
