A flexible time-varying specification of the technical inefficiency effects model |
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Authors: | Giannis Karagiannis Vangelis Tzouvelekas |
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Institution: | (1) Department of Economics, University of Macedonia, 156 Str, Thessaloniki, 540 06, Greece;(2) Department of Economics, Faculty of Social Sciences, University of Crete, University Campus, 74100 Crete, Greece |
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Abstract: | The temporal pattern of technical efficiency in the technical inefficiency effects model, as modeled by Battese and Coelli
(Empir Econ 20:325–332, 1995), is rather restrictive. Specifically, it a priori imposes a common pattern upon all firms in
the sample, which in addition is monotonic over time. Obviously this is an undesirable implication of the model especially
when there is evidence of strong firm heterogeneity and/or a long time span. To overcome this shortcoming, the present paper
incorporates the Cornwell et al. (J Econom 46:185–200, 1990) flexible specification of the temporal pattern of technical efficiency
into technical inefficiency effects model. The proposed formulation is then applied to the agricultural sector of the EU and
US, during the period 1973–1993. The empirical result support the proposed formulation as quite different temporal patterns
of technical efficiency have been found for the ten countries included in the analysis.
We would like to thank an anonymous referee and an associate editor for valuable suggestions in an earlier version of the
paper. |
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Keywords: | Technical inefficiency effects Time-varying technical efficiency Agriculture Panel data |
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