Model Selection in Stochastic Frontier Analysis with an Application to Maize Production in Kenya
This paper shows how to compute the standard errors for partial effects of exogenous firm characteristics influencing firm inefficiency under a range of popular stochastic frontier model specifications. We also develop an R[superscript 2]-type measure to summarize the overall explanatory power of the exogenous factors on firm inefficiency. The paper also applies a recently developed model selection procedure to choose among alternative stochastic frontier specifications using data from household maize production in Kenya. The magnitude of estimated partial effects of exogenous household characteristics on inefficiency turns out to be very sensitive to model specification, and the model selection procedure leads to an unambiguous choice of best model. We propose a bootstrapping procedure to evaluate the size and power of the model selection procedure. The empirical application also provides further evidence on how household characteristics influence technical inefficiency in maize production in developing countries.
| Main Authors: | , |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2009
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| Subjects: | Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity D240, Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Products O130, Agriculture: Aggregate Supply and Demand Analysis, Prices Q110, Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets Q120, Agricultural R&D, Agricultural Technology, Agricultural Extension Services Q160, |
| Online Access: | http://hdl.handle.net/10986/4715 |
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| Summary: | This paper shows how to compute the standard errors for partial effects of exogenous firm characteristics influencing firm inefficiency under a range of popular stochastic frontier model specifications. We also develop an R[superscript 2]-type measure to summarize the overall explanatory power of the exogenous factors on firm inefficiency. The paper also applies a recently developed model selection procedure to choose among alternative stochastic frontier specifications using data from household maize production in Kenya. The magnitude of estimated partial effects of exogenous household characteristics on inefficiency turns out to be very sensitive to model specification, and the model selection procedure leads to an unambiguous choice of best model. We propose a bootstrapping procedure to evaluate the size and power of the model selection procedure. The empirical application also provides further evidence on how household characteristics influence technical inefficiency in maize production in developing countries. |
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