This paper considers the estimation of frontier production functions in panel data models. It proposes a multi-stage method to obtain estimates of (1) the parameters of a flexible input requirement function and (2) technical inefficiency decomposed into time-invariant (firm-specific),...

This paper generalizes a globally concave and flexible cost function to accommodate allocative distortions. These distortions are introduced through shadow prices and are specified as functions of regressors that make distortion factors firm, input, and time specific. The estimated model, based...

This paper analyzes the effects of returns to scale, farm-size, technical, allocative, and scale inefficiencies on the profitability of Utah dairy farms. It derives the conditions necessary to compare the profitability of farms within and between different size classifications as small, medium,...

This paper develops a generalized profit function that incorporates price distortions resulting from imperfect market conditions, sociopolitical and institutional constraints, as well as technical and allocative inefficiency. The model is applied to test (1) the appropriateness of the...

This study is primarily concerned with investigating the technical, allocative, and scale inefficiency of owner-operators of dairy farms in Utah. A stochastic production frontier has been applied to analyze these inefficiencies. The results indicate that there is positive association between...

Using a flexible translog cost function, this paper introduces an error specification to incorporate costs of technical and allocative inefficiencies. First, the maximum likelihood method is developed to obtain consistent parameter estimates of the cost function. These estimates are then used to...

In this paper, the author considers specification and estimation of technical and allocative inefficiency in a cost-minimizing framework using panel data. Some distinguishing features of the model are (1) the functional form of the production technology is flexible enough to allow elasticity to...

This article investigates adverse selection and moral hazard in the voluntary deposit insurance system of Kansas, which operated from 1909 to 1929. Regulations were imposed to limit risk-taking and membership was made voluntary to assuage objections that insurance forces conservative banks to...

This paper considers an extension of technical inefficiency to a mor e disaggregate level, viz., input-specific technical inefficiency, based on a stochastic production frontier. Allocative inefficiency is modeled as a departure from the first order conditions for cost mini mization. The...