Frontier Estimation in Nonparametric Location-Scale Models

Florens, Jean-Pierre, Simar, Léopold and Van Keilegom, Ingrid (2014) Frontier Estimation in Nonparametric Location-Scale Models. Journal of Econometrics, vol. 178 (n° 3). pp. 456-470.

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Conditional efficiency captures efficiency of firms facing heterogeneous environmental conditions. Traditional approaches estimate nonparametrically conditional distribution requiring smoothing techniques. We rather use a flexible nonparametric location-scale model to eliminate the dependence of inputs/outputs on these factors. These “pre-whitened” inputs/outputs define the optimal frontier function and a “pure” measure of efficiency more reliable to produce rankings, since the influence of external factors has been eliminated. Both full and order-mm frontiers are used. The asymptotic properties are established. We can also derive the frontiers in the original units with their asymptotic properties. The approach is illustrated with some simulated and real data.

Item Type: Article
Language: English
Date: January 2014
Refereed: Yes
Uncontrolled Keywords: Nonparametric frontiers, Efficiency analysis, Robust estimation of frontiers, Conditional efficiency
JEL codes: C13 - Estimation
C14 - Semiparametric and Nonparametric Methods
C49 - Other
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:45
Last Modified: 07 Mar 2018 13:22

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