Project Management

Optimal Bandwidth Selection For Conditional Efficiency Measures: A Data-driven Approach

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Executive Summary

In productivity analysis an important issue is to detect how external (environmen-tal) factors, exogenous to the production process and not under the control of the producer, might influence the production process and the resulting efficiency of the firms. Most of the traditional approaches proposed in the literature have serious drawbacks. An alternative approach is to describe the production process as being conditioned by a given value of the environmental variables (Cazals, Florens and Simar, 2002, Daraio and Simar, 2005). This defines conditional efficiency measures where the production set in the input ? output space may depend on the value of the external variables. The statistical properties of nonparametric estimators of these conditional measures are now established (Jeong, Park and Simar, 2008).

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