A0268
Title: A single-index smooth-coefficient stochastic frontier model
Authors: Kai Sun - Shanghai University (China) [presenting]
Subal Kumbhakar - State University of New York at Binghamton (United States)
Abstract: A single-index semiparametric smooth-coefficient stochastic production frontier model where technology parameters and technical inefficiency are unknown smooth functions of production environmental variables is considered. The variables affecting the technology parameters and technical inefficiency are allowed to be either different or the same. Marginal effect formulae of these variables on output and inefficiency are provided. Output growth is decomposed into technical change (TC), input-driven component, and efficiency change (EC), while TFP growth is decomposed into TC, scale component, and EC. Simulations show that our estimation procedures work quite well in finite samples. Finally, using firm-level datasets, the methodology is applied to study the productivity and efficiency, along with their temporal behaviours, for the two Norwegian industry groups: Knowledge Intensive Business Services and high-technology manufacturing industries, and find significant impacts of geographical industrial concentration, export intensity, and location on firm's technology frontier and output.
