Journal ArticleDOI
Two-Stage DEA: Caveat Emptor
Léopold Simar,Paul W. Wilson +1 more
TLDR
In this paper, the authors examine the wide-spread practice where data envelopment analysis (DEA) efficiency estimates are regressed on some environmental variables in a second-stage analysis, and make clear that second stage OLS estimation is consistent only under very peculiar and unusual assumptions on the data-generating process that limit its applicability.Abstract:
This paper examines the wide-spread practice where data envelopment analysis (DEA) efficiency estimates are regressed on some environmental variables in a second-stage analysis. In the literature, only two statistical models have been proposed in which second-stage regressions are well-defined and meaningful. In the model considered by Simar and Wilson (J Prod Anal 13:49–78, 2007), truncated regression provides consistent estimation in the second stage, where as in the model proposed by Banker and Natarajan (Oper Res 56: 48–58, 2008a), ordinary least squares (OLS) provides consistent estimation. This paper examines, compares, and contrasts the very different assumptions underlying these two models, and makes clear that second-stage OLS estimation is consistent only under very peculiar and unusual assumptions on the data-generating process that limit its applicability. In addition, we show that in either case, bootstrap methods provide the only feasible means for inference in the second stage. We also comment on ad hoc specifications of second-stage regression equations that ignore the part of the data-generating process that yields data used to obtain the initial DEA estimates.read more
Citations
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Estimation and Inference in Nonparametric Frontier Models: Recent Developments and Perspectives
Léopold Simar,Paul W. Wilson +1 more
TL;DR: In this paper, a link between frontier estimation and extreme value theory has been established, and several approaches exist for introducing environmental variables into production models; both two-stage approaches, in which estimated efficiencies are regressed on environmental variables, and conditional efficiency measures, as well as the underlying assumptions required for either approach, are examined.
Posted Content
Estimation and Inference in Nonparametric Frontier Models: Recent Developments and Perspectives
Léopold Simar,Paul W. Wilson +1 more
TL;DR: Several approaches exist for introducing environmental variables into production models; both two-stage approaches, in which estimated efficiencies are regressed on environmental variables, and conditional efficiency measures, as well as the underlying assumptions required for either approach, are examined.
Journal ArticleDOI
Assessing eco-efficiency with directional distance functions
TL;DR: This paper proposes the use of directional distance functions and Data Envelopment Analysis techniques to assess eco-efficiency and shows how these functions can be used to compute a wide range of indicators representing different objectives regarding economic and ecological performance.
Journal ArticleDOI
How to measure the impact of environmental factors in a nonparametric production model
TL;DR: In this article, the impact of environmental factors on the production process in a new two-stage type approach but using conditional measures to avoid the flaws of the traditional two stage analysis.
Journal ArticleDOI
Research fronts in data envelopment analysis
TL;DR: This study applies a network clustering method to group the literature through a citation network established from the DEA literature over the period 2000 to 2014, and presents the research fronts, a coherent topic or issue addressed by a group of research articles in recent years.
References
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Journal ArticleDOI
On the estimation of technical inefficiency in the stochastic frontier production function model
Peter Schmidt,James Jondrow +1 more
TL;DR: In this paper, the expected value of u, conditional on (v − u ) is considered, where v is a normal error term representing pure randomness, and u is a non-negative error term describing technical inefficiency.
Book
Theory of cost and production functions
TL;DR: In this article, a unified treatment of cost and production functions underlie the economic theory of production is presented, and the duality between cost function and production function is developed by introducing a cost correspondence, showing that these two functions are given in terms of each other by dual minimum problems.
Journal ArticleDOI
Estimation and inference in two-stage, semi-parametric models of production processes
Léopold Simar,Paul W. Wilson +1 more
TL;DR: In this paper, a coherent data-generating process (DGP) is described for nonparametric estimates of productive efficiency on environmental variables in two-stage procedures to account for exogenous factors that might affect firms’ performance.
Journal ArticleDOI
Efficiency Analysis for Exogenously Fixed Inputs and Outputs
Rajiv D. Banker,Richard C. Morey +1 more
TL;DR: This work evaluates the relative technical and scale efficiencies of decision making units DMUs when some of the inputs or outputs are exogenously fixed and beyond the discretionary control of DMU managers through mathematical programming formulations.
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Estimation and inference in two-stage, semi-parametric models of production processes
Léopold Simar,Paul W. Wilson +1 more