<abstract xmlns="http://www.w3.org/1999/xhtml"><p> A problem of distinguishing between frontier heterogeneity and inefficiency is widely acknowledged in benchmarking. A special type of heterogeneity, based on the spatial structure, can significantly affect performance estimates in the airport industry. In this research we presented a general specification of the spatial stochastic frontier model, which includes spatial lags, spatial autoregressive disturbances and spatial autoregressive inefficiencies. Maximum likelihood estimator has been derived for this model. Applying the suggested model specification to the European airports dataset, we discovered presence of significant spatial heterogeneity, which leads to biased estimates of efficiency, received using classical models.</p></abstract>

A problem of distinguishing between frontier heterogeneity and inefficiency is widely acknowledged in benchmarking. A special type of heterogeneity, based on the spatial structure, can significantly affect performance estimates in the airport industry. In this research we presented a general specification of the spatial stochastic frontier model, which includes spatial lags, spatial autoregressive disturbances and spatial autoregressive inefficiencies. Maximum likelihood estimator has been derived for this model. Applying the suggested model specification to the European airports dataset, we discovered presence of significant spatial heterogeneity, which leads to biased estimates of efficiency, received using classical models.

Distinguishing Between Spatial Heterogeneity and Inefficiency: Spatial Stochastic Frontier Analysis of European Airports

Transport and Telecommunication Institute Lomonosova 1, Riga, LV-1019, Latvia Ph.: (+371)29958338

Transport and Telecommunication Journal

A problem of distinguishing between frontier heterogeneity and inefficiency is widely acknowledged in benchmarking. A special type of heterogeneity, based on...

Distinguishing Between Spatial Heterogeneity and Inefficiency: Spatial Stochastic Frontier Analysis of European Airports

Published Online: Feb 21, 2013

Page range: 29 - 38

DOI: https://doi.org/10.2478/ttj-2013-0004

Keywords
airport efficiency, spatial stochastic frontier, maximum likelihood estimator

This content is open access.

Distinguishing Between Spatial Heterogeneity and Inefficiency: Spatial Stochastic Frontier Analysis of European Airports

Published Online: Feb 21, 2013

Page range: 29 - 38

DOI: https://doi.org/10.2478/ttj-2013-0004

Keywordsairport efficiency, spatial stochastic frontier, maximum likelihood estimator

This content is open access.

Keywords
airport efficiency, spatial stochastic frontier, maximum likelihood estimator