A Comparative Cost Efficiency Analysis of Wheat Farms Using Parametric and Nonparametric Methods

Abstract

This study examined whether the cost efficiency measures were invariant to the choice of parametric and nonparametric methods for a sample of 183 wheat farms. In the deterministic nonparametric method, the economic, scale and overall efficiency results were invariant to the dimensionality. Only allocative and pure technical efficiency measures depended on the dimensionality. The efficiency measures of the deterministic parametric method were smaller than their counterparts in deterministic nonparametric and stochastic frontier methods. Cost efficiency was closely aligned with its counterpart in deterministic methods. This work also illustrated the importance of imposing curvature in the cost function for stochastic frontier results.