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Estimation of Measures Directed at Management of Factors of Production Inefficiency

Author

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  • Aivazian, Sergei

    (CEMI RAS, Moscow, Russia)

  • Afanasiev, Mikhail

    (CEMI RAS, Moscow, Russia)

Abstract

In development of the stochastic frontier methodology we introduce a concept of achievable production potential generalizing that of the frontier production potential. A model of frontier production potential was built taking in account possibilities of management of factors of inefficiency and the related costs. An estimate of the conditional technical efficiency of production relative to the production potential was obtained. A formal description of measures, directed at management of factors of production inefficiency, and methods of estimation of their technical and economic efficiency are offered. Finally, we present the results of experimental calculations are given

Suggested Citation

  • Aivazian, Sergei & Afanasiev, Mikhail, 2007. "Estimation of Measures Directed at Management of Factors of Production Inefficiency," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 8(4), pages 27-41.
    • Handle: RePEc:ris:apltrx:0021
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    References listed on IDEAS

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    1. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
    2. Afanasiev, Mikhail, 2006. "A Model of the Production Potential with Managed Factors of Inefficiency," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 4(4), pages 74-89.
    3. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    4. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Aivazian , Sergei & Afanasiev , Mikhail & Afanasyev, Alexander, 2009. "Economic Efficiency Estimation of Banks’ Activities Directed at Loans Products Advertisement," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 16(4), pages 46-59.
    2. Aivazian, Sergei & Afanasiev, Mikhail, 2009. "Estimation of the Economic Efficiency of a Shift to the Achievable Production Potential," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 15(3), pages 43-55.

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    More about this item

    Keywords

    production potential; stochastic frontier; production function; technical efficiency; achievable production potential;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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