Distinguishing Between Spatial Heterogeneity and Inefficiency: Spatial Stochastic Frontier Analysis of European Airports

Pavlyuk, Dmitry (2013): Distinguishing Between Spatial Heterogeneity and Inefficiency: Spatial Stochastic Frontier Analysis of European Airports. Published in: Transport and Telecommunication , Vol. 14, No. 1 (January 2013): pp. 29-38.

Abstract

A problem of distinguishing between frontier heterogeneity and inefficiency is widely acknowledged in benchmarking. A special type of heterogeneity, based on the spatial structure, can significantly affect performance estimates in the airport industry. In this research we presented a general specification of the spatial stochastic frontier model, which includes spatial lags, spatial autoregressive disturbances and spatial autoregressive inefficiencies. Maximum likelihood estimator has been derived for this model. Applying the suggested model specification to the European airports dataset, we discovered presence of significant spatial heterogeneity, which leads to biased estimates of efficiency, received using classical models.

• Item Type: MPRA Paper
• Language: English
• Keywords: spatial stochastic frontier, maximum likelihood, efficiency, heterogeneity
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L93 - Air Transportation; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C31 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions ; Social Interaction Models

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