Selected Estimation Methods in the Semiparametric Frontier Model

Artur Prędki

doi:https://doi.org/10.59139/ps.2012.03.1

Artur Prędki Uniwersytet Ekonomiczny w Krakowie Przegląd Statystyczny. Statistical Review, vol. 59, 2012, 3, pages: 215-232 Published online: 30 September 2012 DOI https://doi.org/10.59139/ps.2012.03.1

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ABSTRACT

In the paper estimation methods of the production function which are used in the special frontier model are described. The frontier model is of a semiparametric nature, as the production frontier is not given analytically. However, assumptions related to the model errors have parametric character. In order to estimate the frontier, the so-called StoNED (Stochastic Non-smooth Envelopment of Data) multi-stage procedure is used. The first step forms the CNLS method (Convex Nonparametric Least Squares), which is a nonparametric counterpart of OLS. Next stages run according to a scheme, which has been used on the ground of the stochastic frontier models for many years. As a result not only the estimator of the production function is received, but also the estimator of the inefficiency term for a given production unit. In the paper some critical remarks are presented. They are related to faults and limitations of the research methodology. Next, the procedure is illustrated with an empirical study. Finally, potential directions for further research in the area are presented.

KEYWORDS

semiparametric frontier model, production function, CNLS method, StoNED method

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