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Year 2023, Volume: 12 Issue: 2, 59 - 67, 30.07.2023

Serkan Sengul , Yilmaz Koprucu Hakan Yıldız

https://doi.org/10.17261/Pressacademia.2023.1738

Abstract

References

  • Abel, S., & Marire, J. (2021). Competition in the insurance sector: an application of Boone indicator. Cogent Economics & Finance, 9(1), 1974154. https://doi.org/10.1080/23322039.2021.1974154.
  • Aigner, D., Lovell, C. K., & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of econometrics, 6(1), 21-37.
  • Aydın, Ü., & Recep, Kök. (2013). Türk bankacılık sektöründe organizasyonel etkinlik ve etkinsizliğin kaynakları. Verimlilik Dergisi, (2), 7-38.
  • Battese, G. E., & Coelli, T. J. (1988). Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data. Journal of Econometrics, 38(3), 387-399.
  • Battese, G. E., & Coelli, T. J. (1992). Frontier production functions, technical efficiency and panel data: with application to paddy farmers in India. Journal of Productivity Analysis, 3, 153-169.
  • Battese, G. E., & Coelli, T. J. (1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics, 20(2), 325-332.
  • Christensen, L.R., D.W. Jorgenson, and L.J. Lau. 1973. Transcendental logarithmic production frontiers. Review of Economics and Statistics, 55, 28–45. DOI: 10.2307/1927992.
  • Coelli, T. J., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An introduction to efficiency and productivity analysis. Springer Science & Business Media.
  • Cornwell, C., Schmidt, P., and Sickles, R. C. (1990). Production frontiers with crosssectional and time-series variation in efficiency levels. Journal of Econometrics, 46, 185–200.
  • Çalmaşur, G., & Daştan, H. (2015). Concentration in the Turkish cement industry. Asian Social Science, 11(26), 142-153.
  • Çelen, A., & Gunalp, B. (2010). Do investigations of competition authorities really increase the degree of competition? An answer from Turkish cement market.
  • Çevik, B. (2016). Çimento Sektörü. Türkiye İş Bankası İktisadi Araştırmalar Bölümü. https://ekonomi.isbank.com.tr/ContentManagement/Documents/sr201604_cimentosektoru.pdf
  • Ekinci, R. (2018). Avrupa Birliği Bankacılık Endüstrisinde Maliyet Etkinliği Ve Belirleyenleri: Stokastik Sınır Analizi. Yaşar Üniversitesi E-Dergisi, 13(51), 256-266.
  • Falkena, H., Davel, G., Hawkins, P., Llewellyn, D., Luus, C., Masilela, E., ... & Shaw, H. (2004). Competition in South African banking. Task Group Report for the National Treasury and the South African Reserve Bank.
  • Farrell M. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society, 120, 253-290.
  • Greene, W. (2005). Reconsidering heterogeneity in panel data estimators of the stochastic frontier model. Journal of Econometrics, 126(2), 269-303.
  • Holló, D., & Nagy, M. (2006). Bank efficiency in the enlarged European Union (No. 2006/3). MNB working papers.
  • Kasman, A., & Yildirim, C. (2006). Cost and profit efficiencies in transition banking: the case of new EU members. Applied Economics, 38(9), 1079-1090.
  • Kök, R., & Deliktaş, E. (2003). Endüstri İktisadında Verimlilik Ölçme ve Strateji Geliştirme Teknikleri. Birinci Baskı. Dokuz Eylül Üniversitesi Matbaası: İzmir.
  • Kulaksizoglu, T. (2004). Measuring the efficiency of competition policy: Evidence from the turkish cement industry. MPRA Paper No. 357, posted 10 Oct 2006 UTC. https://mpra.ub.uni-muenchen.de/357/.
  • Kumbhakar, S. L., and Lovell, K. (2000). Stochastic Frontier Analysis. Cambridge: Cambridge University Press.
  • Lee, Y. H., and Schmidt, P. (1993). A production frontier model with flexible temporal variation in technical efficiency. The Measurement of Productive Efficiency: Techniques and Applications, 25, 237- 255.
  • Lovell, C. K. (1993). Production frontiers and productive efficiency. The Measurement Of Productive Efficiency: Techniques And Applications, 3, 67-78.
  • Pitt, M. M., & Lee, L. F. (1981). The measurement and sources of technical inefficiency in the Indonesian weaving industry. Journal of Development Economics, 9(1), 43-64.
  • Rosko M., Mutter R. (2008) Stochastic frontier analysis of hospital inefficiency: A review of empirical issues and an assessment of robustness. Medical Care Research and Review, 65, 131-166
  • Republic of Türkiye Ministry of Industry and Technology. Cement Industry Report (2020). (accessed: 10 November, 2022). https://usaktso.org/images/haber/thumbs/Bilgi_Bankasi/Sektor_Rapor/CimentoSektorRaporu_2020.pdf.
  • Republic of Türkiye Ministry of Trade. October foreign trade statistics tables. (accessed: 8 November, 2022). https://ticaret.gov.tr/istatistikler/bakanlik-istatistikleri/dis-ticaret-istatistikleri/ekim-ayi-dis-ticaret-istatistik-tablolari.
  • Turkish Statistical Institute (TurkStat). Business Records Statistics. (accessed: 8 November, 2022). https://biruni.tuik.gov.tr/medas/?locale=tr.
  • Weill, L. (2007). Is there a gap in bank efficiency between CEE and Western European countries? Comparative Economic Studies, 49(1), 101-127

A STOCHASTIC FRONTIER ANALYSIS OF COST EFFICIENCY IN TURKISH CEMENT INDUSTRY

Year 2023, Volume: 12 Issue: 2, 59 - 67, 30.07.2023

Serkan Sengul , Yilmaz Koprucu Hakan Yıldız

https://doi.org/10.17261/Pressacademia.2023.1738

Abstract

Purpose - The main focus of this paper is to measure cost efficiency in Turkish Cement Industry using firm level data over the period 2008-2016. The measurement of cost efficiency in the industry in which there can seem usually competition infringement is of great importance regarding effective allocation of resources. The ineffective allocation of resources can bring about cost inefficiency.
Methodology - In this study, efficiency is measured using a frontier analysis approach, which quantifies efficiency as the gap between the best achievable performance and actual performance. The Stochastic Frontier Analysis (SFA) method is employed to assess cost efficiency of each firm in this manner. By incorporating both statistical error and inefficiency, the SFA method recognizes that deviations from optimal performance can arise from both random errors and inefficiency factors.
Findings- Empirical results show that cost efficiency scores vary between 82% and 93% by different models. The results also indicate a wide range of cost efficiencies across different size cement firms. The lowest cost efficiency score is estimated by TFE, BC95, and PL81 models in 2015.
Conclusion- Average cost efficiency score varies between approximately 93% and 82%, which means that the firms can potentially achieve at least 7% and a maximum of 18% reduction in input costs.

Keywords

Stochastic frontier analysis cement industry cost efficiency efficiency estimation time-varying invariant efficiency

References

  • Abel, S., & Marire, J. (2021). Competition in the insurance sector: an application of Boone indicator. Cogent Economics & Finance, 9(1), 1974154. https://doi.org/10.1080/23322039.2021.1974154.
  • Aigner, D., Lovell, C. K., & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of econometrics, 6(1), 21-37.
  • Aydın, Ü., & Recep, Kök. (2013). Türk bankacılık sektöründe organizasyonel etkinlik ve etkinsizliğin kaynakları. Verimlilik Dergisi, (2), 7-38.
  • Battese, G. E., & Coelli, T. J. (1988). Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data. Journal of Econometrics, 38(3), 387-399.
  • Battese, G. E., & Coelli, T. J. (1992). Frontier production functions, technical efficiency and panel data: with application to paddy farmers in India. Journal of Productivity Analysis, 3, 153-169.
  • Battese, G. E., & Coelli, T. J. (1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics, 20(2), 325-332.
  • Christensen, L.R., D.W. Jorgenson, and L.J. Lau. 1973. Transcendental logarithmic production frontiers. Review of Economics and Statistics, 55, 28–45. DOI: 10.2307/1927992.
  • Coelli, T. J., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An introduction to efficiency and productivity analysis. Springer Science & Business Media.
  • Cornwell, C., Schmidt, P., and Sickles, R. C. (1990). Production frontiers with crosssectional and time-series variation in efficiency levels. Journal of Econometrics, 46, 185–200.
  • Çalmaşur, G., & Daştan, H. (2015). Concentration in the Turkish cement industry. Asian Social Science, 11(26), 142-153.
  • Çelen, A., & Gunalp, B. (2010). Do investigations of competition authorities really increase the degree of competition? An answer from Turkish cement market.
  • Çevik, B. (2016). Çimento Sektörü. Türkiye İş Bankası İktisadi Araştırmalar Bölümü. https://ekonomi.isbank.com.tr/ContentManagement/Documents/sr201604_cimentosektoru.pdf
  • Ekinci, R. (2018). Avrupa Birliği Bankacılık Endüstrisinde Maliyet Etkinliği Ve Belirleyenleri: Stokastik Sınır Analizi. Yaşar Üniversitesi E-Dergisi, 13(51), 256-266.
  • Falkena, H., Davel, G., Hawkins, P., Llewellyn, D., Luus, C., Masilela, E., ... & Shaw, H. (2004). Competition in South African banking. Task Group Report for the National Treasury and the South African Reserve Bank.
  • Farrell M. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society, 120, 253-290.
  • Greene, W. (2005). Reconsidering heterogeneity in panel data estimators of the stochastic frontier model. Journal of Econometrics, 126(2), 269-303.
  • Holló, D., & Nagy, M. (2006). Bank efficiency in the enlarged European Union (No. 2006/3). MNB working papers.
  • Kasman, A., & Yildirim, C. (2006). Cost and profit efficiencies in transition banking: the case of new EU members. Applied Economics, 38(9), 1079-1090.
  • Kök, R., & Deliktaş, E. (2003). Endüstri İktisadında Verimlilik Ölçme ve Strateji Geliştirme Teknikleri. Birinci Baskı. Dokuz Eylül Üniversitesi Matbaası: İzmir.
  • Kulaksizoglu, T. (2004). Measuring the efficiency of competition policy: Evidence from the turkish cement industry. MPRA Paper No. 357, posted 10 Oct 2006 UTC. https://mpra.ub.uni-muenchen.de/357/.
  • Kumbhakar, S. L., and Lovell, K. (2000). Stochastic Frontier Analysis. Cambridge: Cambridge University Press.
  • Lee, Y. H., and Schmidt, P. (1993). A production frontier model with flexible temporal variation in technical efficiency. The Measurement of Productive Efficiency: Techniques and Applications, 25, 237- 255.
  • Lovell, C. K. (1993). Production frontiers and productive efficiency. The Measurement Of Productive Efficiency: Techniques And Applications, 3, 67-78.
  • Pitt, M. M., & Lee, L. F. (1981). The measurement and sources of technical inefficiency in the Indonesian weaving industry. Journal of Development Economics, 9(1), 43-64.
  • Rosko M., Mutter R. (2008) Stochastic frontier analysis of hospital inefficiency: A review of empirical issues and an assessment of robustness. Medical Care Research and Review, 65, 131-166
  • Republic of Türkiye Ministry of Industry and Technology. Cement Industry Report (2020). (accessed: 10 November, 2022). https://usaktso.org/images/haber/thumbs/Bilgi_Bankasi/Sektor_Rapor/CimentoSektorRaporu_2020.pdf.
  • Republic of Türkiye Ministry of Trade. October foreign trade statistics tables. (accessed: 8 November, 2022). https://ticaret.gov.tr/istatistikler/bakanlik-istatistikleri/dis-ticaret-istatistikleri/ekim-ayi-dis-ticaret-istatistik-tablolari.
  • Turkish Statistical Institute (TurkStat). Business Records Statistics. (accessed: 8 November, 2022). https://biruni.tuik.gov.tr/medas/?locale=tr.
  • Weill, L. (2007). Is there a gap in bank efficiency between CEE and Western European countries? Comparative Economic Studies, 49(1), 101-127
There are 29 citations in total.

Details

Primary Language English
Subjects Finance, Business Administration
Journal Section Articles
Authors

Serkan Sengul 0000-0001-9891-9477

Yilmaz Koprucu This is me 0000-0002-9539-7957

Hakan Yıldız 0000-0002-3611-2755

Publication Date July 30, 2023
Published in Issue Year 2023 Volume: 12 Issue: 2

Cite

APA Sengul, S., Koprucu, Y., & Yıldız, H. (2023). A STOCHASTIC FRONTIER ANALYSIS OF COST EFFICIENCY IN TURKISH CEMENT INDUSTRY. Journal of Business Economics and Finance, 12(2), 59-67. https://doi.org/10.17261/Pressacademia.2023.1738

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