@article {Yane:2013-06-01T00:00:00:0003-6846:2337,
author = "Yane, Shinji and Berg, Sanford",
title = "Sensitivity analysis of efficiency rankings to distributional assumptions: applications to Japanese water utilities",
journal = "Applied Economics",
volume = "45",
number = "17",
year = "2013-06-01T00:00:00",
abstract = "This article examines the robustness of efficiency score rankings across four distributional assumptions for trans-log stochastic production-frontier models, using data from 1221 Japanese water utilities (for 2004 and 2005). One-sided error terms considered include the half-normal,
truncated normal, exponential and gamma distributions. Results are compared for homoscedastic and doubly heteroscedastic models, where we also introduce a doubly heteroscedastic variable mean model, and examine the sensitivity of the nested models to a stronger heteroscedasticity correction
for the one-sided error component. The results support three conclusions regarding the sensitivity of efficiency rankings to distributional assumptions. When four standard distributional assumptions are applied to a homoscedastic stochastic frontier model, the efficiency rankings are quite
consistent. When those assumptions are applied to a doubly heteroscedastic stochastic frontier model, the efficiency rankings are consistent when proper and sufficient arguments for the variance functions are included in the model. When a more general model, like a variable mean model is estimated,
efficiency rankings are quite sensitive to heteroscedasticity correction schemes.",
pages = "2337-2348",
url = "http://www.ingentaconnect.com/content/routledg/raef/2013/00000045/00000017/art00002",
doi = "doi:10.1080/00036846.2012.663475",
keyword = "stochastic production frontier models, L95, C21, Japanese water utilities, C16, heteroscedasticity"
}