Article ID Journal Published Year Pages File Type
5097440 Journal of Econometrics 2006 22 Pages PDF
Abstract
The estimation of technical and allocative inefficiencies using a flexible (translog) cost system is found to be quite difficult, especially when both the inefficiencies are random. In this paper we use the alternative primal system consisting of the production function (translog) and the first-order conditions of cost minimization. The estimation of the primal system is more straightforward and it enables us to estimate observation-specific technical and allocative inefficiencies, and their impact on input demand and cost. We use data on steam-electric generating plants from the U.S. to estimate the model using both Cobb-Douglas and translog production functions.
Related Topics
Physical Sciences and Engineering Mathematics Statistics and Probability
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