A generalized inefficiency model with input and output dependence

Tsionas, Mike G. (2024) A generalized inefficiency model with input and output dependence. European Journal of Operational Research, 312 (1). pp. 315-323. ISSN 0377-2217

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In this paper we propose a general inefficiency model, in the sense that technical inefficiency is, simultaneously, a function of all inputs, outputs, and contextual variables. We recognize that change in inefficiency is endogenous or rational, and we propose an adjustment costs model with firm-specific but unknown adjustment cost parameters. When inefficiency depends on inputs and outputs, the firm's optimization problem changes as the first order conditions must take into account the dependence of inefficiency on the endogenous variables of the problem. The new formulation introduces statistical challenges which are successfully resolved. The model is estimated using Maximum Simulated Likelihood and an empirical application to U.S. banking is provided.

Item Type:
Journal Article
Journal or Publication Title:
European Journal of Operational Research
Uncontrolled Keywords:
?? information systems and managementmanagement science and operations researchmodeling and simulationgeneral computer scienceindustrial and manufacturing engineeringmodelling and simulationmanagement science and operations researchinformation systems and ma ??
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Deposited On:
20 Jul 2023 14:35
Last Modified:
15 Jul 2024 23:58