Abstract
Departures from a production or cost frontier may reflect the systematic effect of conditions that contribute to inefficiency. To test whether some portion of frontier function departures can be systematically explained, the frontier inefficiency error component is modeled as a function of various causal factors and a random component. The functional form of the inefficiency error term model is chosen to assure strict one-sidedness. Preliminary empirical results generated from electric utility data suggest the superiority of including both systematic and random components in the inefficiency error term.
Keywords
InefficiencyFrontierEconometricsEconomicsTerm (time)Function (biology)Component (thermodynamics)Random errorSystematic errorMathematicsMicroeconomicsStatistics
Related Publications
Using a Probabilistic Frontier Production Function to Measure Technical Efficiency
This article uses linear programming techniques to "estimate" a frontier Cobb-Douglas production function for U.S. agriculture from 1960 to 1967, using the "average farm" in eac...
Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition
Causal ambiguity inherent in the creation of productive processes is modeled by attaching an irreducible ex ante uncertainty to the level of firm efficiency that is achieved by ...
Why Propensity Scores Should Not Be Used for Matching
We show that propensity score matching (PSM), an enormously popular method of preprocessing data for causal inference, often accomplishes the opposite of its intended goal—thus ...
Remarks on the taking and recording of biometric measurements in bird ringing
Remarks on the taking and recording of biometric measurements in bird ringing Ringing operations hold opportunities for introducing error into biometric recording. This situatio...
Life Cycle Assessment of Greenhouse Gas Emissions from Plug-in Hybrid Vehicles: Implications for Policy
Plug-in hybrid electric vehicles (PHEVs), which use electricity from the grid to power a portion of travel, could play a role in reducing greenhouse gas (GHG) emissions from the...
Publication Info
- Year
- 1991
- Type
- article
- Volume
- 32
- Issue
- 3
- Pages
- 715-715
- Citations
- 677
- Access
- Closed
External Links
Social Impact
Altmetric
PlumX Metrics
Social media, news, blog, policy document mentions
Citation Metrics
677
OpenAlex
Cite This
David Reifschneider,
Rodney Stevenson
(1991).
Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency.
International Economic Review
, 32
(3)
, 715-715.
https://doi.org/10.2307/2527115
Identifiers
- DOI
- 10.2307/2527115