Dear Arne, Thank you very much for your response. I will certainly read it carefully and if I have further questions (after our discussion on this problem), I will go to R forge. I am relatively new in SFA and productivity analysis.
Regarding your question on the presence of any software imposing concavity condition, please read the book Coelli et al 2005, p227-230 (page number of the book instead of the pdf file). According to the book, the software Shazam can do the estimation with concavity constraint. The book is here: http://facweb.knowlton.ohio-state.edu/pviton/courses/crp4700/coelli_Intro_effic.pdf According to my friend working on panel data, the case where efficiency >1 is seldom/never encountered, but the book says the opposite. Thanks, Miao 2013/4/25 Arne Henningsen <arne.henning...@gmail.com> > Dear Miao > > On 25 April 2013 03:26, jpm miao <miao...@gmail.com> wrote: > > I am trying to find out the scale efficiency and optimal scale of banks > > by stochastic frontier analysis given the panel data of bank. I am free > to > > choose any model of stochastic frontier analysis. > > > > The only approach I know to work with R is to estimate a translog > > production function by sfa or other related function in frontier package, > > and then use the Ray 1998 formula to find the scale efficiency. However, > as > > the textbook Coelli et al 2005 point out that the concavity may not be > > satisfied, one needs to impose the nonpositive definiteness condition so > > that the scale efficiency <1. > > It might be that the true technology is not concave and that the > elasticity of scale is larger than one. Indeed, most empirical studies > find increasing returns to scale (in many different sectors). > Therefore, it is probably inappropriate to impose concavity. > > > How can I do it with frontier package? > > The frontier package cannot impose concavity on a Translog production > function and I am not aware of any software that can do this in a > stochastic frontier estimation -- probably, because imposing concavity > usually does not make sense. > > > Is there any other SFA model/function in R recommended to find out the > > scale efficiency and optimal scale? > > I suggest to plot the elasticity of scale against the firm size. If > the elasticity of scale decreases with firm size, then the most > productive firm size is at the firm size, where the elasticity of > scale is one. However, there are some problems with using the Translog > production function (and the Translog distance function) for > determining the optimal firm size [1]. > > [1] http://econpapers.repec.org/RePEc:foi:wpaper:2012_12 > > If you have further questions regarding the "frontier" package, I > suggest that you use the "help" forum at frontier's R-Forge site [2]. > > [2] https://r-forge.r-project.org/projects/frontier/ > > ... and please do not forget to cite the R packages that you use in > your analysis in your publications. Thanks! > > Best wishes, > Arne > > -- > Arne Henningsen > http://www.arne-henningsen.name > [[alternative HTML version deleted]] ______________________________________________ R-help@r-project.org mailing list https://stat.ethz.ch/mailman/listinfo/r-help PLEASE do read the posting guide http://www.R-project.org/posting-guide.html and provide commented, minimal, self-contained, reproducible code.
