Hung-pin Lai

Panel data stochastic frontier model with determinants of persistent and transient inefficiency

In this paper we consider a stochastic frontier panel data model in which the random firm-effects are separated from the persistent and transient technical inefficiency. The model is extended to accommodate factors that can explain both persistent and transient technical inefficiency. We derive formulas to estimate both types of inefficiency and compute marginal effects of the determinants on each type of inefficiency. Our simulation results show that both biases and mean square errors decrease with an increase in sample size (NT). To illustrate the working of our model, we also provide results from an empirical application using data from 40 advanced industrialized, newly industrialized, transition and emerging economies observed from 1995–2006.

Do consumers discount parallel imports

Using data from Taiwan’s Yahoo! auctions of Nikon cameras, this paper investigates whether there exists any difference in transaction results between commodities which are sold by authorized sellers and those which are parallel imports. We find that the parallel imports and the authorized products differ not only in the warranty duration offered by the sellers, but also in the formats in which they are listed, both of which substantially affect trade probability and transaction price. We show that, after taking into account the endogenous choice of listing formats and the characteristics of the sellers and the items, an authorized product has a 7% higher trade probability than that of a parallel import and, if there is a sale, the transaction price as a ratio of the manufacturer’s suggested retail price is 0.093 higher. A small number of less-experienced parallel import sellers, in an attempt to maintain a price comparable to the authorized product, list their items in pure auction with unusually high starting bids. This accounts for the overall lower trade probability for the parallel imports. If we disregard these sellers who adopt pure auction, the authorized product has higher transaction price than, but about the same trade probability as, the parallel import.

The seller's listing strategy in online auctions: Evidence from eBay

This paper studies the sellers online listing strategy and its consequences. By focusing on the fixed-price posting, buy-it-now auction and regular auction, we empirically investigate how the sellers choose the listing format and its associated strategic instruments to better understand their strategic behavior. An empirical model that addresses plausible concerns about sample selection bias and endogeneity is constructed to capture a sellers strategic behavior and examine how auction outcomes are related to this behavior. Based on the estimated model, we then conduct a counterfactual analysis. We find a tradeoff between the expected revenue and sale duration for the three listing formats.

Hospital efficiency under global budgeting: evidence from Taiwan

Global budgeting sets a predetermined cap to restrain health expenditure, but the fixed budget for medical providers could result in less efficient services. This paper measures hospital efficiency under global budgeting using simultaneous stochastic frontier analysis, stressing that physicians and dentists within a hospital were under separate budgets in Taiwan. Empirical results show that hospital efficiency was not improved after global budgeting, and physicians were found to be less efficient than dentists. The physicians and dentists within the same hospital were also found to be less integrated after global budgeting. Empirical results show that a joint analysis improves the estimation efficiency from separate analysis and suggest that the aggregate inefficiency came mostly from physicians in hospitals that were small, public, non-teaching, located in small markets and had a low market share. Except for public hospitals, physicians and dentists in the above hospitals were also found to be less integrated.

Maximum simulated likelihood estimation of the panel sample selection model

ABSTRACT Heckmans (1976, 1979) sample selection model has been employed in many studies of linear and nonlinear regression applications. It is well known that ignoring the sample selectivity may result in inconsistency of the estimator due to the correlation between the statistical errors in the selection and main equations. In this article, we reconsider the maximum likelihood estimator for the panel sample selection model in Keane et al. (1988). Since the panel data model contains individual effects, such as fixed or random effects, the likelihood function is more complicated than that of the classical Heckman model. As an alternative to the existing derivation of the likelihood function in the literature, we show that the conditional distribution of the main equation follows a closed skew-normal (CSN) distribution, of which the linear transformation is still a CSN. Although the evaluation of the likelihood function involves high-dimensional integration, we show that the integration can be further simplified into a one-dimensional problem and can be evaluated by the simulated likelihood method. Moreover, we also conduct a Monte Carlo experiment to investigate the finite sample performance of the proposed estimator and find that our estimator provides reliable and quite satisfactory results.

Reserve Prices in Online Auctions:Theory and Evidence

The paper proposes a simple model of auctions with an impatient seller who chooses the reserve price and the buy-it-now (BIN) price to maximize revenue. The three main sales channels in the online auction (the pure auction, the BIN auction, and the fixed-price sale) are each shown to be an optimal solution for the sellers with certain degrees of time-preference. The theory also predicts that the optimal posted price for the fixed-price listing is greater than the optimal reserve price for the BIN auction, which in turn is greater than that for the pure auction. This prediction is confirmed by data from eBays auction of iPods. Using the sellers inventory as a proxy for his degree of time-preference, the data also confirm the theoretical prediction that there is an inverse relationship between the optimal reserve price and the sellers time-discount factor.