Testing for Productive Efficiency with Errors-in-Variables : With an Application to the Dutch Electricity Sesctor

We develop a nonparametric test of productive efficiency that accounts for thepossibility of errors-in-variables. The test allows for statistical inference based on theextreme value distribution of the L?? norm. In contrast to the test proposed by Varian,H (1985): 'Nonparametric Analysis of Optimising Behaviour with MeasurementError, Journal of Econometrics 30, 445-458, our test can be computed using simpleenumeration algorithms or linear programming. An empirical application for theDutch electricity sector illustrates the proposed test procedure