A copula-based approach to the simultaneous estimation of group and meta-frontiers by constrained maximum likelihood
type="main" xml:id="ajar12026-abs-0001"> <p>Existing approaches to the meta-frontier estimation consist of two stages where the estimates of the local frontier parameters obtained in the first step are used to estimate meta-frontier parameters by means of a linear or quadratic minimisation procedure in the second. Since it was shown by Schmidt (Review of Economics and Statistics 58: 238) that the second step is equivalent to constrained maximisation of a likelihood function, we extend this idea and offer a copula-based approach to the estimation of the parameters of both meta- and group frontiers in a one-step setting. In this way, we ensure a single data-generating mechanism for the estimated parameters, expand the set of potential meta-frontiers and account for the fact that shocks to the individual production units may be correlated with shocks to the local technological environment as a whole. We apply our estimation methodology to a data set on the world agriculture and find that the deviations from the group frontiers are positively correlated with deviations from the meta-frontier, which is a conclusion that is impossible to reach without accounting for stochastic dependence between the two deviation types represented by a copula.
Year of publication: |
2014
|
---|---|
Authors: | Repkine, Alexandre |
Published in: |
Australian Journal of Agricultural and Resource Economics. - Australian Agricultural and Resource Economics Society - AARES. - Vol. 58.2014, 1, p. 90-110
|
Publisher: |
Australian Agricultural and Resource Economics Society - AARES |
Saved in:
Saved in favorites
Similar items by person
-
Repkine, Alexandre, (2000)
-
Repkine, Alexandre, (2014)
-
Repkine, Alexandre, (2014)
- More ...