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Handling Endogeneity in Stochastic Frontier Analysis

Author

Listed:
  • Mustafa U. Karakaplan

    (Georgetown University)

  • Levent Kutlu

    (Georgia Institute of Technology)

Abstract

We present a general maximum likelihood based framework to handle the endogeneity problem in the stochastic frontier models. We implement Monte Carlo experiments to analyze the performance of our estimator. Our findings show that our estimator outperforms standard estimators that ignore endogeneity.

Suggested Citation

  • Mustafa U. Karakaplan & Levent Kutlu, 2017. "Handling Endogeneity in Stochastic Frontier Analysis," Economics Bulletin, AccessEcon, vol. 37(2), pages 889-901.
    • Handle: RePEc:ebl:ecbull:eb-16-00551
    as

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    References listed on IDEAS

    as
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    6. Kutlu, Levent & Sickles, Robin C., 2012. "Estimation of market power in the presence of firm level inefficiencies," Journal of Econometrics, Elsevier, vol. 168(1), pages 141-155.
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    More about this item

    Keywords

    Battese-Coelli Estimator; Endogeneity; Efficiency;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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