A Monte Carlo study of old and new frontier methods for efficiency measurement
This study presents the results of an extensive Monte Carlo experiment to compare different methods of efficiency analysis. In addition to traditional parametricstochastic and nonparametricdeterministic methods recently developed robust nonparametricstochastic methods are considered. The experimental design comprises a wide variety of situations with different returns-to-scale regimes, substitution elasticities and outlying observations. As the results show, the new robust nonparametricstochastic methods should not be used without cross-checking by other methods like stochastic frontier analysis or data envelopment analysis. These latter methods appear quite robust in the experiments.
efficiency measurement monte carlo experiment nonparametric stochastic methods