Nonparametric estimation of allocative efficiency using indirect production theory : Application to container ports in Norway

: Rødseth Kenneth Løvold, Holmen Rasmus Bøgh, Kuosmanen Timo, Schøyen Halvor

Publisher: Springer

: 2024

: Journal of Productivity Analysis

: 62

: 3

: 365

: 377

: 0895-562X

: 1573-0441

DOI: https://doi.org/10.1007/s11123-024-00719-1

: https://link.springer.com/article/10.1007/s11123-024-00719-1

: https://research.utu.fi/converis/portal/detail/Publication/386831321

Adaption to prices is an important feature of productivity development. This paper proposes an extension of the StoNED model to accommodate estimation of allocative efficiency. It demonstrates how indirect production theory is suited for assessing allocative efficiency and helps alleviating the curse of dimensionality for stochastic nonparametric estimators compared to conventional measures of allocative efficiency. Furthermore, the paper elaborates on the appropriate cost of capital for the estimation of allocative efficiency. The proposed model framework is utilized to study allocative efficiency of Norwegian container ports, thereby adding to the literature on seaport terminal efficiency studies. © 2024, The Author(s).

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