Provider: ingentaconnect
Database: ingentaconnect
Content: application/x-research-info-systems
TY - ABST
AU - Yane, Shinji
AU - Berg, Sanford
TI - Sensitivity analysis of efficiency rankings to distributional assumptions: applications to Japanese water utilities
JO - Applied Economics
PY - 2013-06-01T00:00:00///
VL - 45
IS - 17
SP - 2337
EP - 2348
KW - stochastic production frontier models
KW - L95
KW - C21
KW - Japanese water utilities
KW - C16
KW - heteroscedasticity
N2 - 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.
UR - http://www.ingentaconnect.com/content/routledg/raef/2013/00000045/00000017/art00002
M3 - doi:10.1080/00036846.2012.663475
UR - http://dx.doi.org/10.1080/00036846.2012.663475
ER -