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Separating Technical Change from Time-Varying Technical Inefficiency in the Absence of Distributional Assumptions

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Abstract

This paper proposes an alternative model for separating technical change from time-varying technical inefficiency. The proposed formulation uses the general index, developed by Baltagi and Griffin (1988), to model technical change in the production frontier function and a quadratic function of time, as in Cornwell, Schmidt and Sickles (1990), to capture the temporal pattern of technical inefficiency. In such a setting, all parameters associated with the rate of technical change and the temporal pattern of technical inefficiency are identified separately. Moreover, the proposed formulation is independent of any distributional assumption concerning the one-sided error term associated with technical inefficiency, and it can be estimated in a single stage with non-linear FGLS. Empirical results based on a translog production frontier, and estimates of technical inefficiency and technical change are presented for the UK dairy sector over the period 1982–1992.

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Authors and Affiliations

  1. Department of Economics, University of Ioannina, Greece

    G. Karagiannis

  2. School of Management and Business, University of Wales, Aberystwyth, UK

    P. Midmore

  3. Department of Economics, University of Crete, Greece

    V. Tzouvelekas

Authors
  1. G. Karagiannis
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  2. P. Midmore
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  3. V. Tzouvelekas
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Karagiannis, G., Midmore, P. & Tzouvelekas, V. Separating Technical Change from Time-Varying Technical Inefficiency in the Absence of Distributional Assumptions. Journal of Productivity Analysis 18, 23–38 (2002). https://doi.org/10.1023/A:1015700309362

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