Estimation of the two-tiered stochastic frontier model with the scaling property

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

The two-tiered stochastic frontier model has enjoyed success across a range of application domains where it is believed that incomplete information on both sides of the market leads to surplus which buyers and sellers can extract. Currently, this model is hindered by the fact that estimation relies on very restrictive distributional assumptions on the behavior of incomplete information on both sides of the market. However, this reliance on specific parametric distributional assumptions can be eschewed if the scaling property is invoked. The scaling property has been well studied in the stochastic frontier literature, but as of yet, has not been used in the two-tier frontier setting.

Original languageEnglish (US)
Pages (from-to)37-47
Number of pages11
JournalJournal of Productivity Analysis
Volume49
Issue number1
DOIs
StatePublished - Feb 1 2018

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scaling
market
Incomplete information
Scaling
Stochastic frontier model
literature
Seller
Buyers
Surplus
Stochastic frontier

Keywords

  • Heteroskedasticity
  • Identification
  • Incomplete information
  • Nonlinear least squares

ASJC Scopus subject areas

  • Business and International Management
  • Social Sciences (miscellaneous)
  • Economics and Econometrics

Cite this

Estimation of the two-tiered stochastic frontier model with the scaling property. / Parmeter, Christopher.

In: Journal of Productivity Analysis, Vol. 49, No. 1, 01.02.2018, p. 37-47.

Research output: Contribution to journalArticle

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