Integrating spatial dependence into stochastic frontier analysis
Areal, F., Balcombe, K. and Tiffin, R. (2012) Integrating spatial dependence into stochastic frontier analysis. Australian Journal of Agricultural and Resource Economics, 56 (4). pp. 521-541. ISSN 1364-985X
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To link to this article DOI: 10.1111/j.1467-8489.2012.00597.x
An approach to incorporate spatial dependence into stochastic frontier analysis is developed and applied to a sample of 215 dairy farms in England and Wales. A number of alternative specifications for the spatial weight matrix are used to analyse the effect of these on the estimation of spatial dependence. Estimation is conducted using a Bayesian approach and results indicate that spatial dependence is present when explaining technical inefficiency.