Estimating exact efficiency in multi-weight spatial autoregressive stochastic frontier models

Authors

• Levent Kutlu, The University of Texas Rio Grande ValleyFollow

Document Type

Article

Publication Date

9-2026

Abstract

Spatial autoregressive stochastic frontier models allow inefficiency to propagate across connected units. However, invertibility of the system matrix alone does not guarantee that exact spillover-corrected efficiency is admissible. If the inverse of the system matrix has negative entries, some non-negative inefficiency realizations imply negative total inefficiency and efficiency scores above one. Under non-negative spatial autoregressive parameters, we characterize the admissible parameter space for general non-negative spatial weighting matrices and extend the analysis to models with multiple weighting matrices. We also provide a practical sufficient condition and, for row-normalized multi-weight models, a simple necessary and sufficient restriction.

Comments

Original published version available at https://doi.org/10.1016/j.econlet.2026.113140

Recommended Citation

Kutlu, L., 2026. Estimating exact efficiency in multi-weight spatial autoregressive stochastic frontier models. Economics Letters, p.113140. https://doi.org/10.1016/j.econlet.2026.113140

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

Economics Letters

DOI

10.1016/j.econlet.2026.113140