Endogeneity corrected stochastic production frontier and technical efficiency
A major econometric issue in estimating production parameters and technical efficiency is the possibility that some forces influencing production are only observed by the firm and not by the econometrician. Not only can this misspecification lead to a biased inference on the output elasticity of...
| Autores principales: | , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Wiley
2015
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| Acceso en línea: | https://hdl.handle.net/10568/51349 |
| _version_ | 1855540253224337408 |
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| author | Shee, Apurba Stefanou, E.S. |
| author_browse | Shee, Apurba Stefanou, E.S. |
| author_facet | Shee, Apurba Stefanou, E.S. |
| author_sort | Shee, Apurba |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | A major econometric issue in estimating production parameters and technical efficiency is the
possibility that some forces influencing production are only observed by the firm and not by
the econometrician. Not only can this misspecification lead to a biased inference on the output
elasticity of inputs, but it also provides a faulty measure of technical efficiency. We extend the
Levinsohn and Petrin (2003) approach and provide an estimation algorithm to overcome the
problem of endogenous input choice in stochastic production frontier estimation by generating
consistent estimates of production parameters and technical efficiency. We apply the proposed
method to a plant-level panel dataset from the Colombian food manufacturing sector for the
period 1982–1998. This dataset provides the value of output and prices charged for each product,
expenditures, and prices paid for each material used, energy consumption in kilowatt per hour and
energy prices, number of workers and payroll, and book values of capital stock. Empirical results
find that the traditional stochastic production frontier tends to underestimate the output elasticity
of capital and firm-level technical efficiency. The evidence in this research suggests that addressing
the endogeneity issue matters in stochastic production frontier analysis. |
| format | Journal Article |
| id | CGSpace51349 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2015 |
| publishDateRange | 2015 |
| publishDateSort | 2015 |
| publisher | Wiley |
| publisherStr | Wiley |
| record_format | dspace |
| spelling | CGSpace513492025-11-13T10:39:18Z Endogeneity corrected stochastic production frontier and technical efficiency Shee, Apurba Stefanou, E.S. A major econometric issue in estimating production parameters and technical efficiency is the possibility that some forces influencing production are only observed by the firm and not by the econometrician. Not only can this misspecification lead to a biased inference on the output elasticity of inputs, but it also provides a faulty measure of technical efficiency. We extend the Levinsohn and Petrin (2003) approach and provide an estimation algorithm to overcome the problem of endogenous input choice in stochastic production frontier estimation by generating consistent estimates of production parameters and technical efficiency. We apply the proposed method to a plant-level panel dataset from the Colombian food manufacturing sector for the period 1982–1998. This dataset provides the value of output and prices charged for each product, expenditures, and prices paid for each material used, energy consumption in kilowatt per hour and energy prices, number of workers and payroll, and book values of capital stock. Empirical results find that the traditional stochastic production frontier tends to underestimate the output elasticity of capital and firm-level technical efficiency. The evidence in this research suggests that addressing the endogeneity issue matters in stochastic production frontier analysis. 2015-04 2014-11-03T11:24:03Z 2014-11-03T11:24:03Z Journal Article https://hdl.handle.net/10568/51349 en Limited Access Wiley Shee, A. and Stefanou, S. E. 2015 Endogeneity corrected stochastic production frontier and technical efficiency. American Journal of Agricultural Economics 97(3):939-952. |
| spellingShingle | Shee, Apurba Stefanou, E.S. Endogeneity corrected stochastic production frontier and technical efficiency |
| title | Endogeneity corrected stochastic production frontier and technical efficiency |
| title_full | Endogeneity corrected stochastic production frontier and technical efficiency |
| title_fullStr | Endogeneity corrected stochastic production frontier and technical efficiency |
| title_full_unstemmed | Endogeneity corrected stochastic production frontier and technical efficiency |
| title_short | Endogeneity corrected stochastic production frontier and technical efficiency |
| title_sort | endogeneity corrected stochastic production frontier and technical efficiency |
| url | https://hdl.handle.net/10568/51349 |
| work_keys_str_mv | AT sheeapurba endogeneitycorrectedstochasticproductionfrontierandtechnicalefficiency AT stefanoues endogeneitycorrectedstochasticproductionfrontierandtechnicalefficiency |