Work

Likelihood-ratio test for technological differences in two-stage data envelopment analysis for panel data

Year: 2024

Type: article

Abstract: This study explores the question of adapting a likelihood-ratio test in the two-stage data envelopment analysis (DEA) framework, where DEA estimates are regressed against external factors. We focus on the hypotheses of testing the technological difference across time periods (or groups) and propose two bootstrapping procedures. Our Monte Carlo (MC) simulation shows that the proposed test has a substantially better-estimated size for the case of smoothing the ‘spurious ones’, rather than removing them. MC simulation also confirms the curse of dimensionality when the input and output variables increase in the production model. Finally, the proposed test is demonstrated in an empirical illustration.

Source: European Journal of Operational Research

DOI: 10.1016/j.ejor.2024.09.039

Authors: Kai Du, Valentin Zelenyuk

Language: English

Topic: Efficiency Analysis Using DEA

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,290

Funders: University of Wollongong, University of Queensland, Australian Research Council

Award: Improving productivity: theory and application to Australian hospitals