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Productivity studies that use proxy variable estimators routinely specify single-output production functions despite most firms producing multiple outputs. This is usually accomplished by aggregating the firm's outputs using total revenue. Such a formulation rarely provides an adequate...
Persistent link: https://www.econbiz.de/10013236942
This article uses panel data estimation techniques to examine technical efficiency of individual dairy farms in northern Germany. To the extent that agricultural production is characterised by heterogeneous production conditions, estimation techniques that do not account for unobserved...
Persistent link: https://www.econbiz.de/10012750191
From an empirical perspective, this paper critically examines the concepts of returns to scale (RTS) and economies of scale (EOS), and argues that the concept of EOS is more relevant and broader enough to exhibit proper scale economies behavior of firms. Two approaches, i.e., production function...
Persistent link: https://www.econbiz.de/10013015488
Control function approaches to estimating production functions rely on a proxy that is monotone in an unobserved scalar productivity conditioning on other state variables. Ackerberg, Caves, and Frazer (2015) point out a potential functional dependence problem when conditioning only on capital....
Persistent link: https://www.econbiz.de/10012890512
We study Ackerberg, Caves, and Frazer (2015)'s production function estimation method using Monte Carlos simulations. First, we replicate their results by using the same procedure and confirm the existence, as noted by ACF, of a spurious minimum in the estimation. In the population, or when the...
Persistent link: https://www.econbiz.de/10012932473
When benchmarking production units by non-parametric methods like data envelopment analysis (DEA), an assumption has to be made about the returns to scale of the underlying technology. Moreover, it is often also relevant to compare the frontiers across samples of producers. Until now, no exact...
Persistent link: https://www.econbiz.de/10012132662
Persistent link: https://www.econbiz.de/10012132679
The field of production frontier estimation is divided between the parametric Stochastic Frontier Analysis (SFA) and the deterministic, nonparametric Data Envelopment Analysis (DEA). This paper explores an amalgam of DEA and SFA that melds a nonparametric frontier with a stochastic composite...
Persistent link: https://www.econbiz.de/10014050905
The regression residual is commonly used as a productivity indicator. However, the observed input demands are endogenous if rational managers adjust their input use for inefficiency. A large stream of studies considers possible solutions to the endogeneity problem that require as little external...
Persistent link: https://www.econbiz.de/10014036140
This paper builds an unobserved components model that combines a multivariate filter approach with a Cobb-Douglas production function. This combination allows potential output estimates to incorporate more economic structure than the traditional production function approach, while retaining the...
Persistent link: https://www.econbiz.de/10012429180