Journal of Productivity Analysis

, Volume 3, Issue 1–2, pp 153–169 | Cite as

Frontier production functions, technical efficiency and panel data: With application to paddy farmers in India

  • G. E. Battese
  • T. J. Coelli
Article

Abstract

Frontier production functions are important for the prediction of technical efficiencies of individual firms in an industry. A stochastic frontier production function model for panel data is presented, for which the firm effects are an exponential function of time. The best predictor for the technical efficiency of an individual firm at a particular time period is presented for this time-varying model. An empirical example is presented using agricultural data for paddy farmers in a village in India.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Afriat, S.N. (1972). “Efficiency Estimation of Production Functions.” International Economic Review 13, pp. 568–598.Google Scholar
  2. Aigner, D.J. and S.F. Chu. (1968). “On Estimating the Industry Production Function.” American Economic Review 58, pp. 826–839.Google Scholar
  3. Aigner, D.J., C.A.K. Lovell, and P. Schmidt. (1977). “Formulation and Estimation of Stochastic Frontier Production Function Models.” Journal of Econometrics 6, pp. 21–37.Google Scholar
  4. Bailey, D.V., B. Biswas, S.C. Kumbhakar, and B.K. Schulthies. (1989). “An Analysis of Technical, Allocative, and Scale Inefficiency: The Case of Ecuadorian Dairy Farms.” Western Journal of Agricultural Economics 14, pp. 30–37.Google Scholar
  5. Bardhan, P.K. (1973). “Size, Productivity, and Returns to Scale: An Analysis of Farm-Level Data in Indian Agriculture.” Journal of Political Economy 81, pp. 1370–1386.Google Scholar
  6. Battese, G.E. (1991). “Frontier Production Functions and Technical Efficiency: A Survey of Empirical Applications in Agricultural Economics.” Agricultural Economics (to appear).Google Scholar
  7. Battese, G.E. and T.J. Coelli. (1988). “Prediction of Firm-Level Technical Efficiencies With a Generalized Frontier Production Function and Panel Data.” Journal of Econometrics 38, pp. 387–399.Google Scholar
  8. Battese, G.E., T.J. Coelli, and T.C. Colby. (1989). “Estimation of Frontier Production Functions and the Efficiencies of Indian Farms Using Panel Data From ICRISAT's Village Level Studies”, Journal of Quantitative Economics 5, pp. 327–348.Google Scholar
  9. Battese, G.E. and G.S. Corra. (1977). “Estimation of a Production Frontier Model: With Application to the Pastoral Zone of Eastern Australia.” Australian Journal of Agricultural Economics 21, pp. 169–179.Google Scholar
  10. Battese, G.E. and G.A. Tessema. (1992). “Estimation of Stochastic Frontier Production Functions with Time-Varying Parameters and Technical Efficiencies Using Panel Data from Indian Villages.” Paper presented at the 36th Annual Conference of the Australian Agricultural Economics Society, Canberra, 10–12 February, 1992.Google Scholar
  11. Bauer, P.W. (1990). “Recent Developmens in the Econometric Estimation of Frontiers.” Journal of Econometrics 46, pp. 39–56.Google Scholar
  12. Beck, M. (1991). “Empirical Applications of Frontier Functions: A Bibliography.” mimeo, Joachim-Ringelnatz-Str. 20, W-6200 Wiesbaden, Germany, pp. 9.Google Scholar
  13. Binswanger, H.P. and N.S. Jodha. (1978). Manual of Instructions for Economic Investigators in ICRISAT's Village Level Studies Volume II. Village Level Studies Series, Economics Program, International Crops Research Institute for the Semi-Arid Tropics, Patancheru, Andhra Pradesh, India.Google Scholar
  14. Coelli, T.J. (1989). “Estimation of Frontier Production Functions: A Guide to the Computer Program, FRONTIER.” Working Papers in Econometrics and Applied Statistics no. 34, Department of Econometrics, University of New England, Armidale, p. 31.Google Scholar
  15. Coelli, T.J. (1991). “Maximum-Likelihood Estimation of Stochastic Frontier Production Functions with Time-Varying Technical Efficiency Using the Computer Program, FRONTIER Version 2.0.” Working Papers in Econometrics and Applied Statistics no. 57, Department of Econometrics, University of New England, Armidale, p. 45.Google Scholar
  16. Coelli, T.J. (1992). “A Computer Program for Frontier Production Function Estimation.” Economics Letters (to appear).Google Scholar
  17. Cornwell, C., P. Schmidt, and R.C. Sickles. (1990). “Production Frontiers with Cross-Sectional and Time-Series Variation in Efficiency Levels.” Journal of Econometrics 46, pp. 185–200.Google Scholar
  18. Defourny, J., C.A.K. Lovell, and A.G.M. N'Gbo. (1990). “Variation in Productive Efficiency in French Workers' Cooperatives.” Journal of Productivity Analysis 3(1/2), pp. 103–117.Google Scholar
  19. Deolalikar, A.B. and W.P.M. Vijverberg. (1983). “The Heterogeneity of Family and Hired Labor in Agricultural Production: A Test Using District-Level Data from India.” Journal of Economic Development 8(2), pp. 45–69.Google Scholar
  20. Färe, R., S. Grosskopf, and C.A.K. Lovell. (1985). The Measurement of Efficiency of Production. Dordrecht: Kluwer-Nijhoff.Google Scholar
  21. Førsund, F.R., C.A.K. Lovell, and P. Schmidt. (1980). “A Survey of Frontier Production Functions and of Their Relationship to Efficiency Measurement.” Journal of Econometrics 13, pp. 5–25.Google Scholar
  22. Jondrow, J., C.A.K. Lovell, I.S. Materov, and P. Schmidt. (1982). “On the Estimation of Technical Inefficiency in the Stochastic Frontier Production Function Model.” Journal of Econometrics 19, pp. 233–238.Google Scholar
  23. Kalirajan, K.P. (1985). “On Measuring Absolute Technical and Allocative Efficiencies.” Sankhya: The Indian Journal of Statistics, Series B, 47, pp. 385–400.Google Scholar
  24. Kumbhakar, S.C. (1988). “On the Estimation of Technical and Allocative Inefficiency Using Stochastic Frontier Functions: The Case of U.S. Class 1 Railroads.” International Economic Review 29, pp. 727–743.Google Scholar
  25. Kumbhakar, S.C. (1990). “Production Frontiers, Panel Data and Time-Varying Technical Inefficiency.” Journal of Econometrics 46, pp. 201–211.Google Scholar
  26. Kumbhakar, S.C., B. Biswas, and D.V. Bailey. (1989). “A Study of Economic Efficiency and Utah Dairy Farms: A System Approach.” The Review of Economics and Statistics 71(4), pp. 595–604.Google Scholar
  27. Ley, E. (1990). “A Bibliography on Production and Efficiency.” mimeo, Department of Economics, University of Michigan, Ann Arbor, MI 48109, p. 32.Google Scholar
  28. Meeusen, W. and J. van den Broeck. (1977). “Efficiency Estimation from Cobb-Douglas Production Functions With Composed Error.” International Economic Review 18, pp. 435–444.Google Scholar
  29. Richmond, J. (1974). “Estimating the Efficiency of Production.” International Economic Review 15, pp. 515–521.Google Scholar
  30. Saini, G.R. (1979). Farm Size, Resource-Use Efficiency and Income Distribution. New Delhi: Allied Publishers.Google Scholar
  31. Schmidt, P. (1976). “On the Statistical Estimation of Parametric Frontier Production Functions.” The Review of Economics and Statistics 58, pp. 238–239.Google Scholar
  32. Schmidt, P. (1986). “Frontier Production Functions.” Economic Reviews 4, pp. 289–328.Google Scholar
  33. Schmidt, P. and C.A.K. Lovell. (1979). “Estimating Technical and Allocative Inefficiency Relative to Stochastic Production and Cost Frontiers.” Journal of Econometrics 9, pp. 343–366.Google Scholar
  34. Schmidt, P. and C.A.K. Lovell. (1980). “Estimating Stochastic Production and Cost Frontiers When Technical and Allocative Inefficiency are Correlated.” Journal of Econometrics 13, pp. 83–100.Google Scholar
  35. Stevenson, R.E. (1980). “Likelihood Functions for Generalized Stochastic Frontier Estimation.” Journal of Econometrics 13, pp. 56–66.Google Scholar
  36. Timmer, C.P. (1971). “Using a Probabilistic Frontier Function to Measure Technical Efficiency.” Journal of Political Economy 79, pp. 776–794.Google Scholar

Copyright information

© Kluwer Academic Publishers 1992

Authors and Affiliations

  • G. E. Battese
    • 1
  • T. J. Coelli
    • 1
  1. 1.Department of EconometricsUniversity of New EnglandArmidaleAustralia

Personalised recommendations