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Estimating a Mixture of Efficiency Indices

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  • Kumbhakar, Subal
  • Orea, Luis
  • Rodríguez-Álvarez, Ana
  • Tsionas, Efthymos

Abstract

In this paper we estimate parametric input and output distance functions as well as a mixture of input and output distance functions. The main advantage of the mixing model is that it lets the data determine the orientation of technical inefficiency, which is an open problem in efficiency analysis. Since estimates of technical inefficiency from the input and output distance functions are not directly comparable, we develop cross-indices that can be used to compute input (output) technical inefficiency from the estimates of output (input) distance function. These cross-indices are especially useful in the mixture model in which both the input and output distance functions are simultaneously estimated. The proposed technique is applied to a panel data on European Railways (1970-1994).

Suggested Citation

  • Kumbhakar, Subal & Orea, Luis & Rodríguez-Álvarez, Ana & Tsionas, Efthymos, 2003. "Estimating a Mixture of Efficiency Indices," Efficiency Series Papers 2003/08, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    • Handle: RePEc:oeg:wpaper:2003/08
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    References listed on IDEAS

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