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...

A system of regression equations (SURE) for analyzing panel data with random heterogeneity in intercepts and coefficients, and unbalanced panel data is considered. A Maximum Likelihood (ML) procedure for joint estimation of all parameters is described. Since its implementation for numerical...

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...

Permutation techniques, where one recompute the test statistic over permutations of data, have a long history in statistics and have become increasingly useful as the availability of computational power has increased. Until now, no permutation tests for examining returns to scale assumptions,...

The pure model of replicator dynamics though providing important insights in the evolution of markets has not found much of empirical support. This paper extends the model to the case of firms vertically integrated in value chains. We show that i) by taking value chains into account, the...

The key purpose of corporate finance is to provide methods to compute the value of projects. The baseline textbook recommendation is to use the Present Value (PV) formula of expected cash flows, with a discount rate based on the CAPM. In this paper, we ask what is, empirically, the best...

We examine the cost structure of public schools in this paper, using frontier cost models that enable us to estimate sources of inefficiency. A two equation stochastic frontier model is presented that can be used to explain both cost and the sources of inefficiency. Using that model and data for...

This paper analyzes the performance of the European railway sector in the period of deregulation (1990-2005). Using a stochastic frontier panel data model that controls for unobserved heterogeneity a multiple-output multipleinput distance function model is estimated in order to evaluate the...