Title: Estimation of Multiple Output Production Functions
Abstract: This paper addresses speciflcation and estimation of multiple-outputs and multiple-inputs production technology in the presence of technical ine‐ciency. Our primary focus is on the primal formulations. Several competing speciflcations such as production function, input (output) distance function, input requirement function are considered. We show that all these speciflcations come from the same transformation function and are algebraically identical. We also show that:(i) unless the transformation function is separable (i.e., outputs are separable from inputs), the input (output) ratios in the input (output) distance function can not be treated as exogenous (uncorrelated with technical ine‐ciency) resulting inconsistent estimates of the input (output) distance function parameters. (ii) Even if input (output) ratios are exogenous, estimation of the input (output) distance function will result in inconsistent parameter estimates if outputs (inputs) are endogenous. (iii) In the translog model with production uncertainty, input (output) ratios are not exogenous even if outputs (inputs) are exogenous which will make the distance function parameters inconsistent. We address endogeneity and instrumental variable issues in details in the context of both restricted (Cobb-Douglas and Constant-Elasticity of Transformation) and ∞exible (translog) functional forms. Estimation of several speciflcations using both single and system approaches are discussed using Norwegian dairy farming data.
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: article
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Cited By Count: 9
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