Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency

Reifschneider, David; Stevenson, Rodney

doi:10.2307/2527115

Cited by 496 publications

(284 citation statements)

References 6 publications

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“…However, this approach is inconsistent in its distributional assumptions: in the first stage, the efficiency effects are required to be independently and identically distributed (Jondrow et al 1982), whereas in the second stage they are assumed to be a function of firm-specific factors, which implies that they are not identically distributed. Kumbhakar et al (1991) and Reifschneider and Stevenson (1991) noted this inconsistency and specified Stochastic Frontier models in which the inefficiency effects were defined to be explicit functions of firm-specific factors, and all parameters were estimated in a single-stage ML procedure. Battese and Coelli (1995) extended this approach to accommodate panel data.…”

Section: Model Estimation Strategymentioning

confidence: 99%

Zero-tillage as a pathway for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: does it work in farmers’ fields?

Keil

Dsouza

McDonald³

2015

Food Sec.

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In controlled-condition field trials across South Asia, zero-tillage (ZT) has demonstrated considerable scope for enhancing wheat productivity in the Indo-Gangetic Plains (IGP) while using less energy and irrigation water. However, studies that quantify the impact of ZT in farmers' fields are scarce, especially in the less productive and densely populated Eastern IGP, an area that the Indian government is targeting for investment to address current and future food insecurity. Furthermore, a recent global meta-analysis has questioned the yield benefits of ZT, especially when permanent soil cover with crop residues is not maintained. To assess the realworld performance of ZT wheat in Eastern India, we quantified the productivity impact of current ZT practices in the State of Bihar, based on a random sample of 1000 wheatgrowing households, stratified by ZT adoption status. CobbDouglas stochastic production frontiers estimated the effect of ZT on wheat output while controlling for potential selection bias between ZT users and non-users regarding crop management. In contrast to the global meta-analysis, we found that the prevailing ZT practices without full residue retention led to a robust yield gain over conventional-tillage wheat across different agro-ecological zones, amounting to 498 kg ha −1 (19 %), on average. The economic benefit from ZT related yield increase and cost savings in wheat production amounted to 6 % of total annual income among sampled households. We conclude that ZT users reap substantial benefits, and that ZT technology could play a major role in making Bihar selfsufficient in wheat. To increase access to the technology among smallholders, an expansion of the network of ZT service providers is essential and can be supported through targeted policies and development interventions.

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Section: Model Estimation Strategymentioning

confidence: 99%

Zero-tillage as a pathway for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: does it work in farmers’ fields?

Keil

Dsouza

McDonald³

2015

Food Sec.

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“…with a Tobit censored regression model) on the exogenous variables. However, as pointed out by Kumbhakar, Gosh and McGuckin (1991) and Reifenschneider and Stevenson (1991) there are serious econometric problems with this approach. First, it must be assumed that the (in)efficiencies scores obtained in the first stage are independently and identically distributed, but if this is the case, the assumption that the (in)efficiency scores exhibit a functional relationship with the exogenous variables in the second stage is contradicted.…”

Section: Estimation Approachmentioning

confidence: 99%

“…To avoid (at least one of) theses inconsistencies Kumbhakar et al (1991), Reifenschneider andStevenson (1991) and Huang and Liu (1994) developed models for the technical inefficiency effects involved in stochastic frontier functions. In such one-step approaches the parameters of the stochastic frontier as well as the parameters of the exogenous variables are estimated simultaneously.…”

Section: Estimation Approachmentioning

confidence: 99%

The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities

Kalb

2010

Economic Analysis and Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Terms of use: Documents in EconStor mayDownload this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08051.pdf Non-Technical SummaryA key issue in the theoretical and empirical literature of public finance is how intergovernmental grants influence the level of local public spending of the recipient government.Researchers have been particularly interested in whether grants from the federal government stimulate higher levels of overall spending by local governments or rather substitute for local tax revenue. The first effect is called the 'flypaper effect' following Arthur Okun's observation that 'money sticks where it hits'. In contrast, an aspect which has attracted far less attention in the flypaper literature is concerned with the question whether observed changes in expenditures are associated with analogous changes in the actual level of public goods or services or whether increases in expenditures lead (at least to some extent) to a waste of resources (or X-inefficiency) and losses in productive efficiency.Given this background the aim of this paper is to add to the existing literature by studying the causal effects of intergovernmental grants on local technical efficiency in Germany. For this purpose we use a simple bureaucracy model and introduce the possibility that the federal government is able to give (lump sum) grants to the local government as a substitute for local tax revenues. Moreover, we assume that the citizens of the local jurisdiction are susceptible to a misperception of the true tax price of the local public goods or services due to fiscal illusion. In fact, it is assumed that a higher amount of intergovernmental grants leads to an underestimation of the true tax price by the citizens and therefore to a higher demand of public output. Using this framework we analyse how a higher degree of redistribution, that is an increase in the amount of grants to the local government, affects the technical efficiency in the provision of public goods and services in this local jurisdiction. We find that a higher degree of redistribution has a negative impact on the technical efficiency in the local jurisdiction.Finally...

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“…This is usually referred as a two-stage procedure. However, several economists have criticized the two stage procedure (Battese et al, 1989;Reifschneider and Stevenson, 1991;Battese and Coelli, 1995) arguing that the socio-economic variables should be incorporated directly in to the estimation of production frontier model because such variables may have a direct influence on the production efficiency. To overcome inconsistencies in the assumptions regarding the independence of inefficiency effects (Battese and Coelli, 1995;Coelli, 1996) extended the stochastic production frontier model by suggesting that inefficiency effects (u i ) are expressed as an explicit function of a vector of farm specific variables and a random error.…”

Section: Methodsmentioning

confidence: 99%

THE EFFECT OF AGRICULTURAL EXTENSION SERVICE ON THE TECHNICAL EFFICIENCY OF TEFF (<i>ERAGROSTISTEF</i>) PRODUCERS

Elias

Nohmi

Yasunobu

et al. 2014

American Journal of Applied Sciences

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Teff (Eragrostistef) is a major staple food crop in Ethiopia, but smallholder teff production is characterized by persistently low average yield. A major government effort aimed at raising the productivity and competitiveness of smallholder agriculture in Ethiopia involved reforming and implementing agricultural extension service known as Participatory Demonstration and Training Extension System (PADETES). Therefore, this study investigates the effect of agricultural extension service and other factors on the Technical Efficiency (TE) of teff producers in northern Ethiopia. Using cross sectional data we compare TE level of teff producers who are participants and non-participants of Agricultural Extension (AE) program. We address self-selection in to AE program participation using propensity score matching method. Translog stochastic frontier production function is used for TE analysis. The empirical results reveal that, AE program participants' and non-participants' farms have an average TE of 72 and 71% respectively. Both groups of farms have considerable overall technical inefficiencies, suggesting the existence of immense potentials for enhancing production through more efficient use of available technology and resources. Determinants of TE are explained significantly by livestock ownership, credit and improved seed. Based on the results, we derive policy recommendations to improve farmers' teff production performance. These policy measures include the provision of extension services related to technical skill and farm management capacity of the farmers, demand driven livestock extension service, greater access to credit and increasing the availability, quality and adoption of improved seed.

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Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency

Cited by 496 publications

References 6 publications

Zero-tillage as a pathway for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: does it work in farmers’ fields?

Zero-tillage as a pathway for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: does it work in farmers’ fields?

The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities

THE EFFECT OF AGRICULTURAL EXTENSION SERVICE ON THE TECHNICAL EFFICIENCY OF TEFF (<i>ERAGROSTISTEF</i>) PRODUCERS

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