Download presentation
Presentation is loading. Please wait.
1
Efficiency Measurement
William Greene Stern School of Business New York University
2
Session 2 Frontier Functions
3
Deterministic Frontier: Programming Estimators
4
Estimating Inefficiency
5
Statistical Problems with Programming Estimators
They do correspond to MLEs. The likelihood functions are “irregular” There are no known statistical properties – no estimable covariance matrix for estimates. They might be “robust,” like LAD. Noone knows for sure. Never demonstrated.
6
An Orthodox Frontier Model with a Statistical Basis
7
Extensions Cost frontiers, based on duality results:
ln y = f(x) – u ln C = g(y,w) + u’ u > 0. u’ > 0. Economies of scale and allocative inefficiency blur the relationship. Corrected and modified least squares estimators based on the deterministic frontiers are easily constructed.
8
Data Envelopment Analysis
9
Methodological Problems with DEA
Measurement error Outliers Specification errors The overall problem with the deterministic frontier approach
10
DEA and SFA: Same Answer?
Christensen and Greene data N=123 minus 6 tiny firms X = capital, labor, fuel Y = millions of KWH Cobb-Douglas Production Function vs. DEA (See Coelli and Perelman (1999).)
12
Comparing the Two Methods.
13
Total Factor Productivity
Similar presentations
![[Part 4] 1/25 Stochastic FrontierModels Production and Cost Stochastic Frontier Models William Greene Stern School of Business New York University 0Introduction.](/11/3189255/big_thumb.jpg "[Part 4] 1/25 Stochastic FrontierModels Production and Cost Stochastic Frontier Models William Greene Stern School of Business New York University 0Introduction.>")
![[Part 3] 1/49 Stochastic FrontierModels Stochastic Frontier Model Stochastic Frontier Models William Greene Stern School of Business New York University.](/15/4666432/big_thumb.jpg "[Part 3] 1/49 Stochastic FrontierModels Stochastic Frontier Model Stochastic Frontier Models William Greene Stern School of Business New York University.>")
![[Part 8] 1/27 Stochastic FrontierModels Applications Stochastic Frontier Models William Greene Stern School of Business New York University 0Introduction.](/19/5854682/big_thumb.jpg "[Part 8] 1/27 Stochastic FrontierModels Applications Stochastic Frontier Models William Greene Stern School of Business New York University 0Introduction.>")
![[Part 7] 1/68 Stochastic FrontierModels Panel Data Stochastic Frontier Models William Greene Stern School of Business New York University 0Introduction.](/18/6142499/big_thumb.jpg "[Part 7] 1/68 Stochastic FrontierModels Panel Data Stochastic Frontier Models William Greene Stern School of Business New York University 0Introduction.>")
