A new approach to stochastic frontier estimation: DEA+

Gstach, Dieter (1996) A new approach to stochastic frontier estimation: DEA+. Department of Economics Working Paper Series, 39. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.


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The outcome of a production process might not only deviate from a theoretical maximum due to inefficiency, but also because of non-controllable influences. This raises the issue of reliability of Data Envelopment Analysis in noisy environments. I propose to assume an i.i.d. data generating process with bounded noise component, so that the following approach is feasible: Use DEA to estimate a pseudo frontier first (nonparametric shape estimation). Next apply a ML-technique to the DEA-estimated efficiencies, to estimate the scalar value by which this pseudo-frontier must be shifted downward to get the true production frontier (location estimation). I prove, that this approach yields consistent estimates of the true frontier. (author's abstract)

Item Type: Paper
Keywords: stochastic DEA / consistency / semi-parametric frontier estimation / MLE
Classification Codes: JEL C14, C24, D24
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 01 Mar 2002 12:50
Last Modified: 22 Oct 2019 00:41
URI: https://epub.wu.ac.at/id/eprint/298


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