a cointegration analysis of petroleum futures prices abstract this paper presents evidence concerning the number of common stochastic trends in a system of three petroleum futures prices crude oil heating oil and unleaded gasoline using daily data from 3 december 1984 to 30 april 1993 johansen s maximum likelihood approach for estimating long run relations in multivariate vector autoregressive models is used the results indicate the presence of only one common trend

efficiency and productivity of world health systems where does your country stand this article deals with estimating efficiency of world health systems using panel data on world health organization who member countries the stochastic frontier sf approach is used for this purpose we evaluate absolute efficiency as well as rankings and their sensitivity across alternative model specifications using both output maximizing and cost minimizing frameworks we also compare productivity of health service among countries derived from the output maximizing and cost minimizing models results show that efficiency rankings of countries vary substantially depending on whether the goal of healthcare provision is output maximization or health cost minimization the same applies to different sf model specifications

refining for export and the convergence of petroleum product prices abstract the petroleum refining industry has changed over the past decades from one in which capacity primarily served local and regional markets to one in which trade in refined petroleum products has become more widespread we investigate the hypothesis of increasing globalization by examining the convergence of prices for refined products across different markets using data on refined products from market centers in the us and europe we test for convergence of prices using standard time series techniques the data plainly show that markets for refined petroleum products have become more interrelated as europe exported its gasoline surplus and global demand for petroleum products approached refining capacity econometric evidence supports the hypothesis that the us and european markets for oil and refined products are integrated we find evidence that a structural break during the financial crisis of 2008 changed the long run equilibrium price relationships and the short run price dynamics refined product markets are likely to experience continued globalization given trends in the united states and europe and because of key export oriented refining capacity investments made to take advantage of access to specific crude oil sources

shiftable externalities a market solution in this paper we propose a regulatory scheme for what has become known as shiftable externalities not in my backyard type garbage location problemswhere the externality is characterized by the absence of jointness in supply the scheme facilitates the establishment of a market for the externality and it isfeasible for a wider class of regulation problems and more information efficientthan the other regulatory schemes that have been proposed for this type ofexternality finally we show that it is possible to decentralize the participationdecision so as to take account of verification costs

budget constrained frontier measures of fiscal equality and efficiency in schooling equality and efficiency are key issues in educational reform here the authors analyze the efficiency and equality consequences of various school finance reforms using a cost indirect output distance function this function readily models multiple output production under conditions of budgetary constraint and provides a natural measure of performance that is closely related to farrell type measures of efficiency the analysis suggests that despite school district inefficiency finance reforms can affect student achievement however any potential gains in output from redistribution are dwarfed by the potential gains from increased efficiency more strikingly the analysis demonstrates that budgetary reforms designed to equalize expenditures could actually increase the inequality of student achievement

the impact of the 1999 cap reforms on the efficiency of the cop sector in spain the cereal oilseeds and protein crop sector cop occupies a prominent position within the european union s agricultural sector within spain the cop sector accounts for almost a third of total agricultural guidance and guarantee fund expenses and half of the utilized agricultural area uaa the cop sector is not only relevant because of its physical and economic magnitude but also because of the political attention it receives the common agricultural policy cap reforms that occurred during the 1990s paid special attention to this sector this article aims to determine the impacts of agenda 2000 on a sample of spanish cop farmers production decisions by using an output oriented stochastic distance function the distance function allows for an assessment of the reform motivated changes on total output input used input composition and crop mix it also permits an assessment of the impacts of the reform on farms technical efficiency results show that the reform has shifted the production frontier inward and changed output composition in favor of voluntary set aside land with respect to input composition agenda 2000 induced a decrease in land fertilizers pesticides and other inputs in favor of labor in addition agenda 2000 has had a negative impact on technical efficiency

the dynamics pattern of price dispersion in retail fuel markets abstract this paper empirically investigates the dynamics of price dispersion in retail fuel markets as a response to the corresponding wholesale price changes for this purpose we take advantage of a daily dataset of prices fixed by gas stations in two spanish regions it is consistently found that retail price dispersion is temporarily enlarged as a consequence of wholesale price increases while it is reduced due to decreases the presence of asymmetries in the short run dynamics is also revealed the impact of positive changes in the wholesale price is in the first days of adjustment clearly greater the dynamics pattern could be explained at least in part by the faster response of prices in the stations associated with the two vertically integrated companies that have the largest market share i e repsol and cepsa

the transferability and depletability of externalities abstract this paper is concerned with symmetry and asymmetry in pollution pricing as conditions for the attainment of a pareto optimum in pollution pricing it has already been claimed freeman j environ econom manage 8 321 329 1984 that for both depletable and undepletable externalities pollution pricing should be asymmetric it is shown in this paper that the relevant distinction is not between depletable and undepletable externalities rather it is between transferable and non transferable externalities the effects of which can or cannot be transferred by the recipient to another party optimality requires symmetric pricing for transferable externalities and asymmetric pricing for non transferable externalities

technical efficiency and impacts of deregulation an analysis of three functions in u s electric power utilities during the period from 1992 through 2000 the main purpose of this study is to examine the impacts of deregulation on technical efficiency and its changes over time for large scale u s electric power utilities during the period from 1992 through 2000 we analyze the efficiency of three individual functions i e generation transmission distribution and general administration and the deregulatory impacts on each of them in order to implement the analysis we estimate an input distance function by using a stochastic frontier analysis the results indicate that there is a significant impact of deregulation on efficiency in the generation and general administration functions while no effects are observed in the transmission distribution function

bias and precision in the dea two stage method in data envelopment analysis dea the two stage method is a popular procedure for accounting for exogenous influences on efficiency with the conventional two stage method a dea is first conducted using only traditional endogenous inputs and outputs then the first stage dea scores are regressed on the environmental contextual exogenous inputs of interest the regression outcomes are used to identify exogenous inputs that influence the first stage dea scores to a statistically significant degree and to adjust dea scores to account for these influences herein it is demonstrated empirically that the conventional method exhibits substantial bias and low precision with the degree of bias and precision affected by input variance and correlation a reverse two stage procedure that yields estimates without the bias and precision problems that compromise the validity of the conventional method s estimates is suggested

the control of invasive species on private property with neighbor to neighbor spillovers invasive pests cross property boundaries property managers may have private incentives to control invasive species despite not having sufficient incentive to fully internalize the external costs of their role in spreading the invasion each property manager has a right to future use of his own property but his property may abut others properties enabling spread of an invasive species the incentives for a foresighted property manager to control invasive species have received little attention we consider the efforts of a foresighted property manager who has rights to future use of a property and has the ability to engage in repeated discrete control activities we find that higher rates of dispersal associated with proximity to neighboring properties reduce the private incentives for control controlling species at one location provides incentives to control at a neighboring location control at neighboring locations are strategic complements and coupled with spatial heterogeneity lead to a weaker link public good problem in which each property owner is unable to fully appropriate the benefits of his own control activity future use rights and private costs suggest that there is scope for a series of coase like exchanges to internalize much of the costs associated with species invasion pigouvian taxes on invasive species potentially have qualitatively perverse behavioral effects a tax with a strong income effect e g failure of effective revenue recycling can reduce the value of property assets and diminish the incentive to manage insects on one s own property

on the shiftable externalities abstract in the debate concerning how to treat the victims of a depletable externality bird argues that if the externality is shiftable it is efficient to tax the victim s shifting behavior or compensate his acceptance baumol and oates accept his conclusion in the revised edition of their acclaimed textbook however shaw and shaw assert that bird and baumol and oates taxation policy could be nonoptimal since they overlook the possibility of resisting the shift of an externality and the victim s conjectural variation this paper shows that with modifications made necessary by the conjectural variation each of the policy prescriptions proposed by those previous studies provides theoretically correct incentives for the victims but that they differ with respect to feasibility shaw and shaw appear to have misinterpreted bird and baumol and oates argument the analysis in this paper reveals that in the presence of a shiftable externality the pareto optimum must be at the corner some interesting implications can be derived from such a feature it is argued that in terms of feasibility the most favorable policy is one which compensates the victim s acceptance of a shiftable externality this argument is in accord with that of bird

stochastic estimation of firm inefficiency using distance functions econometric estimation of allocative and technical efficiency has frequently been carried out using a shadow cost function and its associated share or demand equations since the problem is formulated in terms of shadow prices the effect of allocative inefficiency on input usage must be computed indirectly from input share or demand equations as an alternative approach we derive and estimate an input shadow distance system comprising the dual shadow input distance function and the price equations derived from the shadow cost minimization problem estimated shadow quantities provide direct estimates of the effect of allocative inefficiency on input usage one can also easily calculate firm and time varying technical inefficiency by decomposing the residuals we also compute returns to scale and the cost savings obtained by eliminating both types of inefficiency our approach is illustrated using a panel of u s railroads both the cost function and the distance function are valid representations of multioutput technologies the arguments of the cost function are output quantities and input prices while the arguments of the distance function are input and output quantities the input distance function measures the extent to which the firm is input efficient in producing a given set of outputs while the cost function assumes cost minimization by a firm which is input efficient the shadow cost function is a generalization of the cost function and depends on output quantities and shadow internal to the firm input prices rather than actual market input prices thus the shadow cost function assumes shadow cost minimization but not actual cost minimization this function has frequently been employed in fixed effects estimation of allocative efficiency ae and technical efficiency te an observed input vector is technically efficient if it is on the isoquant of the observed output vector an input vector is allocatively efficient if the radial contraction of the input vector to the isoquant is cost minimizing identification of parameters that measure ae can be achieved by the estimation of a shadow cost system comprising the actual cost equation and the share or input demand equations which are expressed in terms of shadow prices and output quantities shadow cost systems have been estimated by atkinson and halvorsen 1984 sickles good and johnson 1986 eakin and kniesner 1988 kumbhakar 1992 and atkinson and cornwell 1994 among others given panel data the deviation of shadow from actual input prices can be measured by price specific inefficiency parameters that may vary across firms and over time however the estimation of the effect of

depletable externalities and pigouvian taxation abstract in their book baumol and oates the theory of environmental policy externalities public outlays and the quality of life prentice hall englewood cliffs n j 1975 argue that whether an externality is depletable private or undepletable public is the key characteristic in determining the optimal pricing pattern they argue that unlike the undepletable case a negative depletable externality requires not only a charge or tax on the generator of the externality but a payment or compensation to the victim in order to achieve pareto optimality it is shown that the key characteristic determining whether compensation of victims is required for efficiency is not the depletability of the externality but whether the victim can costlessly control or limit the amount of the damaging substance received

a new way of measuring the wti brent spread globalization shock persistence and common trends abstract the standard cointegration and the persistence of the spread of the brent wti price have been widely analyzed however no studies have been able to present evidence of both issues jointly so far a novel focus is presented in this paper from the application of the fractionally cointegrated vector autoregressive fcvar approach which allows the rigidity of the standard cointegration to be solved as result of the application of the fcvar model we identify several degrees of globalization by analyzing the order of integration of the error correction term indeed by using permanent transitory decomposition analysis we present what drives the relationship between both oil crude prices information the findings shown here reveal that the brent wti market is strongly globalized nevertheless the brent wti price spread follows a long memory process and the brent drives the brent wti price structure these results sustain some corollaries on economic policies for economic agents policy makers and business operators

cost constrained industry inefficiency in this paper a definition of industry inefficiency in cost constrained production environments is introduced this definition uses the indirect directional distance function and quantifies the inefficiency of the industry in terms of the overall output loss given the industry cost budget the industry inefficiency indicator is then decomposed into sources components reallocation inefficiency arising from sub optimal configuration of the industry firm inefficiency arising from a failure to select optimal input quantities given the prevalent inputs prices firm inefficiency due to lack of best practices the method is illustrated using data on ontario electricity distributors these data show that lack of best practices is only a minor component of the overall inefficiency of the industry less than 10 percent with reallocation inefficiency accounting for more than 75 percent of the overall inefficiency of the system an analysis based on counter factual input prices is conducted in order to illustrate how the model can be used to estimate the effects of a change in the regulation regime

on the determinants of school district efficiency competition and monitoring abstract a number of researchers have asserted that inefficiency in the u s school system arises from a lack of incentives for public schools to behave efficiently this paper uses a shephard input distance function to model educational production and a switching regressions estimation to explore the relationship between school district efficiency and two existing incentive mechanisms competition and voter monitoring we find evidence that ease of monitoring enhances both technical and allocative efficiency of urban school districts and that increased competition reduces allocative inefficiency in communities above a competitive threshold we find no evidence that competition is related to technical inefficiency

carbon efficiency of us colleges and universities a nonparametric assessment abstractunder the american college and university presidents climate commitment acupcc institutes of higher education have pledged to pursue a goal of carbon neutrality we utilize emissions reported under the acupcc agreement and a nonparametric data envelopment analysis approach in order to evaluate the relative performance of signatories to the agreement in terms of producing teaching and research with the least greenhouse gas emissions we find that while many signatory institutions are now producing their desirable outputs relatively efficiently in terms of carbon emissions there still exists considerable variation in efficiency and potential for improvement results of a second stage efficiency change analysis shows evidence of both movement towards the efficiency frontier since signing and some movement of the frontier itself though this evidence comes primarily from teaching focused institutions

analysing the technical efficiency of the spanish football league first division with a random frontier model this article analyses technical efficiency of football clubs in the spanish football league division 1 primera liga from the seasons 1995 1996 to 2004 2005 with an unbalanced panel data the random frontier model is used allowing the identification of random variables in the cost frontier it is concluded that the price of capital investment the number of points won and attendance are heterogeneous variables therefore no common public policy aiming to improve efficiency can embrace all of the clubs so that policies by clusters are required

estimating technical and allocative efficiency in the public sector a nonparametric analysis of dutch schools abstract public sector output provision is influenced not only by discretionary inputs but also by exogenous environmental factors in this paper we extended the literature by developing a conditional dea estimator of allocative efficiency that allows a decomposition of overall cost efficiency into allocative and technical components while simultaneously controlling for the environment we apply the model to analyze technical and allocative efficiency of dutch secondary schools the results reveal that allocative efficiency represents a significant 37 percent of overall cost efficiency on average although technical inefficiency is still the dominant part furthermore the results show that the impact of environment largely differs between schools and that having a more unfavorable environment is very expensive to schools these results highlight the importance of including environmental variables in both technical and allocative efficiency analysis

decomposition of total factor productivity in world health production a stochastic frontier approach while countries around the globe have increased spending on health care economists and policy makers have raised concerns over the productivity and efficiency of health care this article applies a stochastic frontier approach to address this issue using data from 141 countries for the period 1993 to 1997 from the perspective of productivity change our results suggest that gains in population health will be greater provided that more resources are allocated to investment in human capital we also show that the scale component accounts for 65 70 of the productivity change that is omitting the scale component in our case will result in a significant underestimation of the decline in the productivity of world health production we do not find evidence supporting the hypothesis that production frontiers differ between organization for economic cooperation and development oecd and non oecd countries however the change in productivity and scale elasticity do vary significantly between these countries

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

decomposition of productivity growth using distance functions the case of dairy farms in three european countries within an output distance function framework the total factor productivity growth index is decomposed into four components technical change technical and allocative efficiency and scale component we estimate stochastic translog output distance functions using panel data from dairy farms over the period 1991 94 for three european countries germany the netherlands and poland results indicate that the change in the productivity growth index in germany 6 and poland 5 are mainly dictated by the technical change component in contrast the productivity growth index in the netherlands 3 is influenced by allocative efficiency components

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

risk management in the oil industry can information on long run equilibrium prices be utilized abstract we analyze co movements between the prices of crude oil and major refined products during the period 1992 1998 specifically we explore the existence of long run equilibrium price relationships and whether deviations from estimated equilibrium can be utilized for predictions of short term price changes and for risk management the econometric evidence strongly supports the hypothesis that crude and product prices are co integrated past deviations from long term equilibrium are significant in an error correction specification of short term product price changes the results represent valuable information for hedging particularly in integrated oil companies for which price risk is related to margin variations

efficiency in new zealand sheep and beef farming the impacts of regulatory reform in this study we consider the impacts of dramatic regulatory reform during the 1980s on the efficiency of farms in new zealand using unbalanced panel data a translog distance function representing the multiple output and input technology and incorporating nonneutral regulatory impacts is used for the analysis determinants of technical inefficiency including a regulatory variable a time term and a debt equity ratio are also incorporated in a one step model estimated by maximum likelihood stochastic production frontier methods we find evidence of regulatory induced changes in output composition toward beef and deer and away from wool and especially lamb but little associated technical inefficiency these patterns motivated investment in complementary capital land and beef deer livestock inputs firms that were more flexible in their adaptation toward these new mixes adjusted to regulatory changes with less upheaval so any existing inefficiency appears linked to debt equity levels

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

specification and estimation of stochastic multiple output production and technical inefficiency this paper presents a primal based approach for specification and estimation of multiple output production frontiers that allows simultaneous identification and estimation of determinants of technical inefficiency the proposed model extends the technical efficiency effects model by battese and coelli 1995 to general multiple output technologies an empirical application using swedish health care panel data from the years 1989 1994 is included the key issue is to test for the effects on technical efficiency of an organizational reform implemented with the primary purpose to increase efficiency the results reveal no significant effect on technical efficiency of the reform but evidence of overall decreased technical efficiency and technical progress in the provision of health care over the studied time period are found

networks and transaction costs based on the well known fact that social networks can provide effective mechanisms that help to increase the trust level between two trade partners we apply a simple game theoretical framework to derive transaction costs as a high risk of opportunistic behavior in a repeated trade relation determined by the density and size of trading networks in the empirical part of the paper we apply a two stage procedure to estimate the impact of social network structures on farm s transaction costs observed for different input and output markets at a first stage we estimate a multiple input multiple output stochastic ray production function to generate relative shadow prices of three inputs and two outputs traded by farms at a second stage a structural equation system is derived from the first order conditions of farm s profit maximization to estimate simultaneously the of commodity specific transaction cost functions for all traded farm inputs and outputs estimation results based on a sample of 315 polish farms imply a significant influence of social network structures on farm s transaction costs moreover estimated transaction costs correspond to a reasonable amount of farm specific shadow prices this abstract was borrowed from another version of this item

the impact of internal markets on health care efficiency evidence from health care reforms in sweden a purchaser provider split together with output based reimbursement were recently introduced by several swedish county councils these changes have been motivated by arguments of efficiency and consumer choice this paper tests the null hypothesis that hospital services are provided as efficiently by county councils with internal markets and output based reimbursement as by county councils with budget reimbursement we first estimate technical efficiency using data envelopment analysis and then we regress the efficiency scores as the dependent variable on new internal organizations in a multiple regression by use of pooled cross section data for the 26 county councils for two years 1993 and 1994 the results reject our null hypothesis and we conclude that the organizational changes in the county councils improve health care efficiency our results further indicate that the potential savings in costs due to a hypothetical switch from budget based allocation to an output based allocation is about 13 we

price relationships in the petroleum market an analysis of crude oil and refined product prices in this paper the relationships between crude oil and refined product prices are investigated in a multivariate framework this allows us to test several partly competing assumptions of earlier studies in particular we find that the crude oil price is weakly exogenous and that the spread is constant in some but not all relationships moreover the multivariate analysis shows that the link between crude oil prices and several refined product prices implies market integration for these refined products this is an example of supply driven market integration and producers will change the output mix in response to price changes

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

estimating the speed of adjustment to target levels the case of energy prices in this paper we propose a model that estimates the speed of energy price adjustment to its target level we also explain the source of price adjustment moreover we extract energy price bubbles and show that bubbles help explain price adjustment since ours is the first paper that develops an energy price adjustment model and links it to bubbles several avenues for future research have emerged from our analysis the first is to provide a theoretical framework for the bubbles and price adjustment mechanism the second direction of research will be to continue the search for other potential determinants of price adjustment

technical efficiency of european railways a distance function approach this study has two principal objectives the first objective is to measure and compare the performance of european railways the second objective is to illustrate the usefulness of econometric distance functions in the analysis of production in multioutput industries where behavioural assumptions such as cost minimization or profit maximization are unlikely to be applicable using annual data on 17 railways companies during 1988 1993 multioutput distance functions are estimated using corrected ordinary least squares cols the resulting technical efficiency estimates range from 0 980 for the netherlands to 0 784 for italy with a mean of 0 863 the distance function results are also compared with those obtained from single output production functions where aggregate output measures are formed using either total revenue or a tornqvist index the results obtained indicate substantial differences in parameter estimates and technical efficiency rankings casting significant doubt upon the reliability of

the resistibility and shiftability of depletable externalities abstract in their recently revised book baumol and oates the theory of environmental policy 2nd ed cambridge univ press cambridge uk 1988 accept bird s argument on the optimal taxation policy when externalities are shiftable and depletable their conclusion is that the standard pigouvian tax which is placed upon the generator of a negative externality can be extended to tax the victims who shift the externality to others or extended to compensate recipients in order to achieve pareto optimality it is shown in this paper that their conclusion is not free from error because the possibility of resisting a shifted externality and conjectural variations by recipients is not recognized whether an externality is shiftable depends not only on the shifting activity of the original victim but also the resisting activity of his neighbors and their conjectures about each other s action as such the shifters should be taxed and the recipients should be compensated at the same rate per unit of externality shifted if the tax base is the output of the shifting and resisting activities on the other hand if the tax base is the input which produced the shifting of the externality then both the shifters and the recipients should be subject to a tax or subsidy per unit of input that they have engaged in whether it is a tax or a subsidy depends on the direction and magnitude of the conjectural variation the model and its policy implication can be generalized to cover the omnipresent and wasteful rent seeking activities

teacher unions and the cost of public education do teacher unions affect the cost of public education based upon data from two national surveys and holding measures of educational output and other factors constant the authors of this paper find that teacher unions raise costs by 7 to 15 percent the estimated differential is not reduced by treating unionization as endogenous by distinguishing between large and small districts or by distinguishing between districts in large and small cities the union effect on cost works through teacher compensation production technology and factor use and is borne primarily by taxpayers with little or no effect on average student achievement

the production characteristics of local public education a multiple product and input analysis since the seminal work of baumol panzer and willig 1 economists have become increasingly interested in incorporating the multifaceted nature of real world production functions into their empirical analyses multiproducts multiple inputs and the relaxation of the long run equilibrium condition are some prime examples of major innovations in production modeling an excellent example of this innovative literature is the study by cowing and holtmann 7 that focuses on the short run production characteristics associated with the hospital services industry specifically cowing and holtmann find evidence contrary to long run equilibrium and that economies of scope are at least as important as economies of scale in the production of hospital services moreover several empirical studies relating to the production characteristics of other goods and services such as higher education 6 crime prevention 9 electric utilities 15 and airlines 5 have provided ample evidence that these pertinent factors matter from both an econometric and a policy perspective the literature concerning the production characteristics of primary and secondary education however has lagged behind in terms of incorporating more realism into the analysis typically studies concerned with primary and secondary education production 2 3 13 14 maintain that schools operate at a long run equilibrium position and produce a single output with a single input i e teachers thus assuming away factors which these other industry studies have found to be significant in fact jimenez 12 is the only study to date on local primary and secondary education production that is based on less restrictive assumptions several limitations are associated with his research however each of these limitations reduce the generality of his findings concerning the production characteristics of primary and secondary education first jimenez employs a small sample to obtain estimates of various production characteristics bringing into question the overall

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

application of the distance function to nonmarket valuation of environmental goods and services an illustrative example abstract this paper develops and implements a unique formulation of a household production model in that technology is characterized as a distance function the properties of the distance function allow for the derivation of shadow prices for the inputs and outputs associated with household production which can be applied to the problem of valuing nonmarket goods or activities the approach requires only one input to or output of household production to bear a price the derivation of shadow prices for all other household inputs outputs follows from the properties of the distance function i demonstrate the approach using data on the waste management activities of a sample of households from marietta georgia and by calculating shadow prices for the nonmarket activity of recycling

bureaucratic choice and nonoptimal provision of public goods theory and evidence local governments allocation decisions are modeled in the context of a slack maximizing bureaucrat who produces public goods according to a production function that includes both provision and the constituents socio economic characteristics to gain a better understanding of the determinants of slack comparative statics and an empirical study of illinois municipalities are conducted the indirect output distance function provides efficiency scores upon which we regress several variables representing socio economic characteristics costs and competition measures we find that slack or inefficient behavior is associated with richer communities lower education levels and a lack of competition for residents among municipalities

estimating long run economic equilibria with stochastic trends an asymptotic theory is provided to analyze a menu of currently existing estimators of cointegrated systems we study in detail the single equation ecm seecm approach of hendry our theoretical results lead to prescriptions for empirical work such as specifying seecm s nonlinearly and including lagged equilibrium relationships rather than lagged differences of the dependent variable as covariates simulations support these prescriptions and point to problems of overfitting not encountered in the semiparametric approach of phillips and hansen 1990

an indirect approach to the evaluation of producer performance in this paper we suggest a somewhat new analytical approach to producer performance evaluation the suggested approach is somewhat new in that it synthesizes existing analytical techniques from three areas and uses them to look at performance evaluation in a new way the approach is particularly relevant to public sector or service sector contexts in which the performance of alternative providers of a public service is to be evaluated in these contexts any of the following conditions may hold 1 the standard profit maximizing cost minimizing or revenue maximizing paradigms are inappropriate 2 prices of some services being provided or of some resources being consumed are either nonexistent or unobserved 3 observed prices are not exogenous due to monopoly or monopsony power examples abound it is frequently argued that the provision of medical legal educational transportation employment and many other services by public or private agencies is driven by goals other than the maximization of profit moreover these and many other services such as police and fire protection do not always have market prices with which to value them in addition the lack of competition in the provision of many such services and thus in the employment of specialized resources used in their provision makes it dangerous to use existing but distorted market prices to compare the performance of providers on the basis of revenue or cost much less profit

environmental efficiency and economic growth of china a ray slack based model analysis abstract the chinese economy has been experiencing rapid growth since the implementation of the reform and opening up policy however at the same time it faces issues regarding resource savings and environmental protection which are important aspects of the new industrialization therefore this study conducts data envelopment analysis dea to evaluate the environmental efficiency of chinese regions certain existing dea models account for undesirable outputs and do not elucidate the weak disposable relationship between undesirable and desirable outputs thus polar theory is introduced among the dea modeling in this study first drawing on stochastic frontier analysis ray stochastic frontier analysis and dea we propose a ray slack based model rsbm to evaluate provincial environmental efficiencies in china from 2004 to 2012 subsequently an rsbm malmquist luenberger total factor productivity index is structured finally economic growth environmental efficiency and energy consumption are analyzed using spatial panel econometrics as this study treats industrial waste as undesirable outputs the rsbm results show that the environmental efficiencies in the east are the highest while those in the central regions are the lowest the spatial econometric analysis reveals that the ratios of direct to total elasticity and those of direct to total effect for capital labor and energy input variables are fixed furthermore the study provides policy implications and suggestions for future research