Journal of Productivity Analysis

, Volume 41, Issue 1, pp 131–140 | Cite as

Technical efficiency with state-contingent production frontiers using maximum entropy estimators

  • Pedro MacedoEmail author
  • Elvira Silva
  • Manuel Scotto


Although the theory of state-contingent production is well-established, the empirical implementation of this approach is still in an infancy stage. The possibility of finding a large number of states of nature, few observations per state and models affected by collinearity have led some researchers to claim the urgent need to develop robust estimation techniques. In this paper, we investigate the performance of some maximum entropy estimators to assess technical efficiency with state-contingent production frontiers. The methodological discussion and the simulation study provided in the paper reveal some of the potential of these estimators. Small mean squared error loss and small differences between the true and the estimated mean of technical efficiency show that the maximum entropy can be a powerful tool in the estimation of state-contingent production frontiers.


Maximum entropy State-contingent production Technical efficiency 

JEL Classification

C13 C15 



We would like to start by expressing our gratitude to the referees. They offered extremely valuable comments and suggestions for improvements. This work was supported by FEDER funds through COMPETE–Operational Programme Factors of Competitiveness (“Programa Operacional Factores de Competitividade”) and by Portuguese funds through the Center for Research and Development in Mathematics and Applications (University of Aveiro) and the Portuguese Foundation for Science and Technology (“FCT–Fundação para a Ciência e a Tecnologia”), within project PEst-C/MAT/UI4106/2011 with COMPETE number FCOMP-01-0124-FEDER-022690. Pedro Macedo is also supported by the grant SFRH/BD/40821/2007 from FCT.


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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Center for Research and Development in Mathematics and Applications, Department of MathematicsUniversity of AveiroAveiroPortugal
  2. 2.CEF.UP, Faculty of EconomicsUniversity of PortoPortoPortugal

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