New insights into the stochastic ray production frontier
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New insights into the stochastic ray production frontier. / Henningsen, Arne; Belin, Matej; Henningsen, Geraldine.
In: Economics Letters, Vol. 156, 2017, p. 18-21.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - New insights into the stochastic ray production frontier
AU - Henningsen, Arne
AU - Belin, Matej
AU - Henningsen, Geraldine
PY - 2017
Y1 - 2017
N2 - The stochastic ray production frontier was developed as an alternative to the traditional output distance function to model production processes with multiple inputs and multiple outputs. Its main advantage over the traditional approach is that it can be used when some output quantities of some observations are zero. In this paper, we briefly discuss – and partly refute – a few existing criticisms of the stochastic ray production frontier. Furthermore, we discuss some shortcomings of the stochastic ray production frontier that have not yet been addressed in the literature and that we consider more important than the existing criticisms: taking logarithms of the polar coordinate angles, non-invariance to units of measurement, and ordering of the outputs. We also give some practical advice on how to address the newly raised issues.
AB - The stochastic ray production frontier was developed as an alternative to the traditional output distance function to model production processes with multiple inputs and multiple outputs. Its main advantage over the traditional approach is that it can be used when some output quantities of some observations are zero. In this paper, we briefly discuss – and partly refute – a few existing criticisms of the stochastic ray production frontier. Furthermore, we discuss some shortcomings of the stochastic ray production frontier that have not yet been addressed in the literature and that we consider more important than the existing criticisms: taking logarithms of the polar coordinate angles, non-invariance to units of measurement, and ordering of the outputs. We also give some practical advice on how to address the newly raised issues.
KW - Stochastic ray production frontier
KW - Distance function
KW - Multiple outputs
KW - Primal approach
KW - Zero output quantities
U2 - 10.1016/j.econlet.2017.04.006
DO - 10.1016/j.econlet.2017.04.006
M3 - Journal article
VL - 156
SP - 18
EP - 21
JO - Economics Letters
JF - Economics Letters
SN - 0165-1765
ER -
ID: 184839591