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| Author: | Kuosmanen, T. Fosgerau, M. |
| Title: | Neoclassical versus frontier production models? Testing for the skewness of regression residuals |
| Journal: | Scandinavian Journal of Economics
2009 : VOL. 111:2, p. 351-367 |
| Index terms: | companies neo-classical economics production models |
| Language: | eng |
| Abstract: | The study divides the empirical literature on production and cost functions into two strands. The neoclassical approach concentrates on model parameters, while the frontier approach demcomposes the disturbance term to a symmetric noise term and a positively skewed inefficiency term. A theoretical justification is proposed for the skewness of the inefficiency term, arguing that this skewness is the key testable hypothesis of the frontier approach. A proposal to test the regression residuals for skewness in order to distinguish the two competing approaches is made. |
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