The influence of some external factors on the measure of technical efficiency of firms is a relevant question, because the analysis of their impact on the different levels of production can get two main features. Firstly, it allows to measure the efficiency rate of the production units that share the same level of the external factors, and, secondly, to recognize relevant factors that affect the efficiency in production itself. This study highlights the measure of firms technical efficiency, performed by the linear mixed effects model framework. Different levels of technical efficiency of firms can be evaluated by distribution-free quadratic estimators, as well as maximum likelihood estimators. The model parameters estimates in the application study are attained by the restricted maximum likelihood estimation method. The model discussed in the present research has two main starting points, that are stated beforehand: a) the model is designed for including production technology as inputs in terms of continuous variables, and various sources of inefficiency in terms of categorical variables, that specify different clusters; b) the model can works without specific distributional assumptions related to technical inefficiency. Further, the model explains the presence of inefficiency as a portion of the model variance, based on the covariance matrices of the random effects and of the residual.
Technical efficiency estimators in linear mixed effects stochastic production frontier models
SALVATORE, Renato
2010-01-01
Abstract
The influence of some external factors on the measure of technical efficiency of firms is a relevant question, because the analysis of their impact on the different levels of production can get two main features. Firstly, it allows to measure the efficiency rate of the production units that share the same level of the external factors, and, secondly, to recognize relevant factors that affect the efficiency in production itself. This study highlights the measure of firms technical efficiency, performed by the linear mixed effects model framework. Different levels of technical efficiency of firms can be evaluated by distribution-free quadratic estimators, as well as maximum likelihood estimators. The model parameters estimates in the application study are attained by the restricted maximum likelihood estimation method. The model discussed in the present research has two main starting points, that are stated beforehand: a) the model is designed for including production technology as inputs in terms of continuous variables, and various sources of inefficiency in terms of categorical variables, that specify different clusters; b) the model can works without specific distributional assumptions related to technical inefficiency. Further, the model explains the presence of inefficiency as a portion of the model variance, based on the covariance matrices of the random effects and of the residual.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
