Munich Personal RePEc Archive

Integrating spatial dependence into stochastic frontier analysis

Areal, Francisco J and Balcombe, Kelvin and Tiffin, R (2010): Integrating spatial dependence into stochastic frontier analysis.

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Abstract

An approach to incorporate spatial dependence into Stochastic Frontier analysis is developed and applied to a sample of 215 dairy farms in England and Wales. A number of alternative specifications for the spatial weight matrix are used to analyse the effect of these on the estimation of spatial dependence. Estimation is conducted using a Bayesian approach and results indicate that spatial dependence is present when explaining technical inefficiency.

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