We develop a nonparametric test of productive efficiency that accounts for the possibility of errors-in-variables. The test allows for statistical inference based on the extreme value distribution of the L?? norm. In contrast to the test proposed by Varian, H (1985): 'Nonparametric Analysis of Optimising Behaviour with Measurement Error, Journal of Econometrics 30, 445-458, our test can be computed using simple enumeration algorithms or linear programming. An empirical application for the Dutch electricity sector illustrates the proposed test procedure.

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Erasmus Research Institute of Management
ERIM Report Series Research in Management
Erasmus Research Institute of Management

Kuosmanen, T, & Post, G.T. (2001). Testing for Productive Efficiency with Errors-in-Variables: with an application to the Dutch electricity sesctor (No. ERS-2001-22-F&A). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/88