Firm and time varying technical and allocative efficiency: an application for port cargo handling firms

Abstract

In this paper we present an econometric model to calculate firm and time-varying indexes of technical and allocative inefficiency following both the parametric and the error component approach. To achieve these aims, we estimate a system of equations for a translog input distance function and cost shares equations. In order to illustrate the methodology we present an application for cargo handling in ports using a panel data obtained from firms operating at the port of Las Palmas in Spain. This sector is a multioutput and regulated sector so the estimation of an input distance function is especially useful for our aims.