Small sample performance of two approaches to technical efficiency estimation in noisy multiple output environments

Abstract

This paper provides simulation evidence concerning some statistical properties of two different approaches to technical efficiency estimation for multiple-output production under noisy conditions: The Ray Frontier Approach (RFA) from Löthgren (1997) DEA+ proposed in Gstach (1996). RFA, unlike earlier approaches in the realm of stochastic frontier analysis, is capable of efficiency estimation in the case of multiple outputs as well and lends itself for comparison with DEA+. Several settings with varying sample sizes, noise to signal ratios and mean inefficiencies are investigated.