The Distribution and Heterogeneity of Technical Efficiency within Industries: An Empirical Assessment

Arbeitspapier

This paper analyzes the distribution of technical efficiency within manufacturing industries. Using a representative sample of 35,000 firms in 255 industries of the German cost structure census, technical efficiencies are estimated by applying a deterministic frontier production function with firmspecific fixed effects. A new measure is also introduced for characterizing the extent of heterogeneity within an industry that is robust with regard to extreme values of a few small firms. It was found that the level of intra-industry heterogeneity is mainly determined by an industries? average technical efficiency, average firm size, capital intensity and the rate of new firm formation. Most strikingly, we find that in about 95 percent of industries the distribution of technical efficiency is skewed to the right, not to the left as is commonly assumed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 453

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Market Structure, Firm Strategy, and Market Performance: General ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
• Subject: Technische Effizienz ; Heterogenität ; Deterministische Frontier- Produktionsfunktion ; Technical efficiency ; heterogeneity ; deterministic production function frontier ; Technische Effizienz ; Verarbeitendes Gewerbe ; Statistische Verteilung ; Schätzung ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fritsch, Michael ; Stephan, Andreas
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/18305
• Last update: 10.03.2025, 11:43 AM CET