Subal C. Kumbhakar

A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms

This article investigates farm-level efficiency of U.S. dairy farmers by estimating their technical and allocative efficiency. Technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm-specific characteristics and a random component. By doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model. Given the inputs, variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency. The empirical results indicate that (a) levels of education of the farmer are important factors determining technical inefficiency and (b) large farms are more efficient (technically) than small and medium-sized farms. Both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer.

Stochastic Frontier Analysis: Author Index

published by the press syndicate of the university of cambridge A catalog record for this book is available from the British Library.

Stochastic Frontier Analysis: Frontmatter

published by the press syndicate of the university of cambridge A catalog record for this book is available from the British Library.

Production frontiers, panel data, and time-varying technical inefficiency

Abstract This paper uses a panel-data framework and models firm-specific technical inefficiency which is allowed to vary over time. The specification is flexible enough to accommodate increasing, decreasing, and time-invariant behavior of technical inefficiency. Time-varying firm- and input-specific allocative inefficiency is also incorporated. The estimation method suggested uses a parametric production function and cost-minimization hypothesis.

DEA, DFA and SFA: A comparison

The nonparametric data envelopment analysis (DEA) model has become increasingly popular in the analysis of productive efficiency, and the number of empirical applications is now very large. Recent theoretical and mathematical research has also contributed to a deeper understanding of the seemingly simple but inherently complex DEA model. Less effort has, however, been directed toward comparisons between DEA and other competing efficiency analysis models. This paper undertakes a comparison of the DEA, the deterministic parametric (DFA), and the stochastic frontier (SFA) models. Efficiency comparisons across models in the above categories are done based on 15 Colombian cement plants observed during 1968–1988.

Deregulation, Ownership, and Productivity Growth in the Banking Industry: Evidence from India

This paper analyzes the relationship between deregulation and total factor productivity (TFP) growth in the Indian banking industry using a generalized shadow cost function approach. TFP growth is decomposed into a technological change, a scale, and a miscellaneous component. A disaggregated panel data analysis, using the population of public and private banks over 1985-96 that covers both pre-and post-deregulation periods, indicates that a significant decline in regulatory distortions and the anticipated increase in TFP growth have not yet materialized following deregulation. While private sector banks have improved their performance mainly due to the freedom to expand output, public sector banks have not responded well to the deregulation measures.

The Effects of Deregulation on the Performance of Financial Institutions: The Case of Spanish Savings Banks

This paper examines the impact of regulatory reform on the performance of Spanish savings banks. To this end it uses panel data for the period 1986-1995 and a flexible variable profit function that incorporates time-varying technical efficiency. The focus is whether increased competition brought on by deregulation affected performance of banks over time. Bank performance, measured by the percentage change in profitability, ceteris paribus, is decomposed into technical change and change in technical efficiency both of which are defined in terms of the profit function. We also examine output technical efficiency, which is defined in terms of the production possibility frontier. Several alternative models with different specifications of technical efficiency are used to check robustness of the results. Empirical results show declining levels of output technical efficiency along with a significantly high rate of technical progress. In spite of declining technical efficiency during this period, we find evidence of an increasing trend in productivity growth.

The specification of technical and allocative inefficiency in stochastic production and profit frontiers

Abstract In previous studies, frontier production models have been analysed either in a non-optimizing or cost-minimizing framework. In this paper we discuss estimation of technical and allocative inefficiency under the behavioral assumption of profit maximization. Specification and estimation issues are discussed in the context of the Cobb-Douglas production function.

A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach

This study is primarily concerned with investigating the technical, allocative, and scale inefficiency of owner-operators of dairy farms in Utah. A stochastic production frontier has been applied to analyze these inefficiencies. The results indicate that there is positive association between years of education and productivity of labor and capital. Productivity is also found to be negatively related to off-farm income. Regarding the effects of farm size on efficiency, it is found that large farms are the most efficient of all sizes considered. Separate estimates of technical, allocative, and scale inefficiencies indicate that large and medium-sized farms are technically more efficient than small farms. Large farms, on average, are found to be performing much better than medium-sized and small farms so far as allocative and scale inefficiency are concerned. Copyright 1989 by MIT Press.

Modeling allocative inefficiency in a translog cost function and cost share equations: An exact relationship

Abstract Previous studies using translog cost function used ad hoc specifications to model allocative inefficiency in the cost function and the cost share equations. This paper uses a translog cost function and establishes an exact relationship between allocative inefficiency in the cost share equations and in the cost function. Such an exact relationship was believed to be possible only for self dual production functions.