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This paper considers the maximum likelihood estimation of a stochastic frontier production function with an interval outcome. We derive an analytical formula for calculating the likelihood function of interval stochastic frontier models. Monte Carlo experiments reveal that the finite sample performance of our method is promising even when the sample size is relatively moderate. We also provide an exact formula for evaluating technical efficiency with interval outcome and apply our method to measure information inefficiency in the labor market for newly graduated college students in Taiwan.

A number of universities in Taiwan are currently confronting problems of low enrolment rates and financial distress mainly as a result of low birth rates and over-expansion of the higher education industry over the last few decades. These universities were requested by the Taiwan Ministry of Education to find a solution, including shutting down problematic departments and merging with other institutions. As such, information on cost efficiency and the optimal size of universities is important for making appropriate decisions. A stochastic cost frontier approach is adopted in the study to measure the cost efficiency and identify optimal size of Taiwanese universities by considering the heterogeneity of university quality. The results of the study indicate a positive correlation between the optimal size and the university quality. Approximately 47 percent of the selected universities are identified as either over- or under-sized. Moreover, the magnitude of cost saving from efficiency improvement is found to be no smaller than that of size adjustment. Therefore, it is suggested that universities should put more effort into efficiency improvement while considering size adjustment.

In this paper, a quantile function is suggested as an alternative description of a production technology. Since the quantile function may not share the same functional properties as the frontier function, it is argued that the quantile-based production function serves as a better benchmark for a firm’s production structure analysis. This argument is extended to the metafrontier analysis. The quantile metafrontier is defined as the envelopment of all groups’ quantile frontier at the same quantile level. The quantile technology gap serves as a more relevant indicator of efficiency in the adopted technology than the traditional measure of the metafrontier technology gap. The quantile approach is illustrated using survey data to estimate the earning profiles for men, and the impact of human capital on the industrial wage distributions in the service industry, the manufacturing industry, and all other industries in Taiwan.

To insure a proper and meaningful productivity assessment of DMUs with different production technologies, this article develops a difference-based profit metafrontier Luenberger productivity indicator. Adopting the proposed model, we empirically measure the profit inefficiency and examine the profit productivity convergence for samples banks consisting of 31 Taiwanese banks and 50 Chinese city banks over 2010–2014. Empirical results show that Chinese banks perform better in profit efficiency than Taiwanese banks. While Chinese banks have better technology in profit creation than Taiwanese banks, the latter may reap much higher profit gain than the former if they can adopt the profit metafrontier. The results of the profit metafrontier Luenberger productivity indicator analysis show that both Chinese and Taiwanese banks have experienced declines in profit productivity. However, the results also indicate a divergence in productivity growth for Chinese city banks and a convergent productivity growth for Taiwanese banks. JEL CLASSIFICATION: D20, G21, P34

This research modifies the directional Russell measure (DRM) of Fukuyama and Weber (2009) [1] to decompose the Nerlovian profit efficiency in Chambers et al. (1998) [2] so as to obtain a generalized measure that completely excludes technical inefficiency from allocative inefficiency. Based on such a decomposition, we further develop a new slack-based and profit-oriented productivity indicator, combining the Nerlovian profit measure with the conventional Luenberger productivity indicator (LPI), in order to provide a full picture of the sources of productivity change. Productivity change, based on the profit boundary, is decomposed into four components: the change in technical efficiency; the change in allocative efficiency; the shift of technology; and the price effect from outputs and inputs. This decomposition provides a more complete picture of the sources of productivity change. The above indicator is used herein to measure the productivity change of Taiwanese banks in terms of profit.

This paper develops a range directional distance data envelopment analysis (DEA) model to simultaneously deal with the problems of negative data and undesirable outputs in the study of performance measurement with two-stage DEA. We report on the development of this model to handle both positive and negative data in a DEA framework and accommodate the problem of undesirable intermediate outputs in the first stage of operational processes. Unlike previous two-stage DEA models we allow for a nonuniform abatement factor imposing on stage 1’ production technology. Such a model is then applied to evaluate Taiwanese bank efficiencies both at the operational stage and profitability stage in banking activities based on a data set consisting of 35 domestic banks in Taiwan in the period 2007. The results indicate that, by the range directional two-stage data envelopment analysis model, the operational efficiency was smaller than the profitability efficiency. Many banks generated too many performing loans in which independent banks should reduce more performing loans than financial holding company subsidiary banks. Both the ratio of investments to loans and the ratio of nonperforming loans to performing loans did not have significant contributions to the efficiency. This paper is able to provide information for bank operators and researchers on the managerial and strategic implications of how negative data and undesirable outputs affect efficiency and how to measure efficiency appropriately.

This study measures the profit efficiencies of Taiwanese and Chinese banks with the assumption that both types could operate under the metafrontier. To consider the risk consideration of banks, we include equity capital as a quasi-fixed input and develop the risk-based measures of the meta Nerlovian profit efficiency. We further decompose meta profit efficiency and gap into technology and allocative efficiencies and gaps. We use 34 Taiwanese banks and 70 Chinese banks in 2011 to empirically measure profit efficiency and its decompositions. Empirical results show that the Chinese state-owned banks perform the best in meta profit efficiency, followed by Chinese joint-equity banks and Taiwanese state-owned banks. These three types of banks are performing better than the other types of banks in Taiwan and China. We also find that Taiwanese private banks perform better in profit and technical efficiencies versus Chinese city banks.

In this paper, quantile regression models are suggested as an alternative description of a production technology. The quantile of continuous order defines the production profile and the quantile-based individual technical efficiency relative to the quantile order. Quantile-based production frontier and efficiency are easy to derive and estimate and do not envelop all sample observation points. A quantile-based production frontier is more robust to extreme observations than DEA or FDH. Furthermore, quantile regression does not make a distribution assumption. It is more robust to the misspecification of error structure than DFA or SFA. In this paper, the quantile regression methods are extended to semiparametric smooth coefficient models. A local linear fitting scheme to estimate the smooth coefficients is proposed in the quantile framework. An empirical application of the model to the Taiwan manufacturing industry demonstrates the potential for the estimation of production technology and efficiency measures.

This study develops an applicable profit-oriented productivity indicator when producers pursue profit maximization and can recognize input and output prices. We define the indicator, inspired by the Luenberger indicator and the Nerlovian efficiency measurement, in terms of both quantity distance functions and profit. Hence, the study׳s first stage decomposes the profit-oriented productivity change into two terms: profit efficiency change and profit technology change. Second, we decompose profit efficiency change into the changes in technical efficiency and allocative efficiency. Finally, profit technology change is separated into two components for capturing the shifts of technology and relative output/input prices. These decompositions provide a more complete picture of the sources of productivity change. We illustrate them with a sample of Taiwanese banks and compute the results using the models of directional distance functions.

This study applies the data envelopment analysis approach and extends the group-specific cost Malmquist (CM) productivity index of Maniadakis and Thanassoulis (Eur J Oper Res 154:396–409, 2004) to define the meta CM productivity index under meta production technology. Parallel to the technology gap defined in the relationship between a group-specific adopted technology and its meta potential technology, we define a CM gap as the ratio of two CM productivity indices that measure the convergence of the group-specific cost frontier to the meta cost frontier and develop a further decomposition of the CM gap. To implement the decompositions of the CM index and CM gap, the research empirically examines panel data of 27 Taiwanese banks and 18 Chinese banks covering the period 2006–2009.

The objective of the study is to provide empirical evidence on the value of public service broadcasting (PSB) in Taiwan, which is a critical factor when considering the provision of more public funding. Being based on a nationwide telephone survey in Taiwan, this study uses the contingent valuation method to elicit citizens' willingness to pay (WTP) for maintaining the current PSB in Taiwan. The results show that household average WTP per year for PSB is estimated to be NT$982 (US$29.89), which is equal to 0.18% of GDP per capita in 2007. Such WTP estimate is much higher than the current government subsidy for PSB per household, which implies respondents' high appreciation on PSB as well as the potential benefit that Taiwan PSB could bring to the family. Our estimates of WTP provide important information for government authorities and policy-makers when making funding decisions. Furthermore, our survey results also point to some prioritized functions as potential niches on which the Taiwan PSB could focus...

Using the stochastic metafrontier framework of Battese et al. (J Prod Anal 21:91–103, 2004), this study proposes to compare and measure the cost efficiency and cost frontier gap between the banking industry in Taiwan and China. It further identifies environmental variables that determine bank’s cost frontier gap between two countries. Data on 69 sample banks for years 2005–2009 are used in the empirical analysis and inference. The empirical results show that Taiwanese banks have in general the superior cost frontier of production, but inferior cost efficiency of operation than Chinese banks. Private banks in Taiwan have the best cost frontier, whereas foreign banks in China are most cost efficient among all banks in Taiwan and China. The empirical results also reveal that the majority of Taiwanese banks are undersized and that most banks in China are oversized. Finally, the regression results show that the financial market structure, institutional environment, and political development are significant determinants of the cost gap between the cost frontiers of banks in Taiwan and China. Therefore, programs related to changes directed toward a better bank production environment can be initiated to improve the cost technologies of banks in both Taiwan and China.

A change in profit can originate from the output side and the input side. In the spirit of work by Tone [1] and follows Grifell-Tatje and Lovell's [2] , we propose a non-oriented slacks-based measure (SBM) model to decompose the change in the operating profit into various meaningful components: quantity effect and a price effect. The quantity effect can be decomposed into a productivity effect and an activity effect. The productivity effect is further decomposed into a technical effect and an operating efficiency effect. Both of them include an output side, which will result in a change in revenue and an input side which will result in a change in cost. The activity effect can be decomposed into a product mix effect, a resource mix effect and a scale effect. We illustrate our decompositions to the Taiwanese banking sector during the period 1994–2002 using the average of the base and current prices to evaluate these contributions. We find ignoring input side effects on the decomposition of profit changes would cause misleading results in managerial issues.

The purpose of this study is to construct a student-based performance evaluation model for business schools in Taiwan. College graduates’ starting wage and their multiple abilities cultivated in school are used as performance indicators. The value-added forms of these indicators are employed to assess the pure impact of school on graduate's performance. To prevent impractical indicator weights, we incorporate job market recruiters’ weights from an AHP survey into the assurance region data envelopment analysis (AR-DEA) for empirical analysis. Empirical results show that the public schools on average outperform the private schools. However, there are still some private schools that perform better than the public ones. Besides, in regard to the discriminatory power and the distribution of output weights, the proposed AR-DEA is better than DEA in measuring the performance of the business colleges in Taiwan.

This paper derives an analytic closed-form formula for the cumulative distribution function (cdf) of the composite error of the stochastic frontier analysis (SFA) model. Since the presence of a cdf is frequently encountered in the likelihood-based analysis with limited-dependent and qualitative variables as elegantly shown in the classic book of Maddala (Limited-dependent and qualitative variables in econometrics. Cambridge University Press, Cambridge, 1983), the proposed methodology is useful in the framework of the stochastic frontier analysis. We apply the formula to the maximum likelihood estimation of the SFA models with a censored dependent variable. The simulations show that the finite sample performance of the maximum likelihood estimator of the censored SFA model is very promising. A simple empirical example on the modeling of reservation wage in Taiwan is illustrated as a potential application of the censored SFA.

This study provides an appropriate analytical approach using stated preference analysis and the contingent valuation method to investigate consumers’ willingness to pay a premium for genetically modified (GM) foods together with their prior purchase intentions. Although most analyses treat consumers’ attitudes and willingness to pay as separate issues, we introduce the idea of prior purchase intention to analyze these two issues as a whole. To achieve this purpose, a modeling technique invoking the multinomial logistic model and the accelerated failure time model is presented. Based on the data collected from an essential double-bounded design, our empirical results suggest that Taiwanese consumers are willing to pay a premium of about 11 NT dollars (7% of the given average market price of 150 NT dollars for the non-GM salmon) to avoid GM-soybean-fed salmon. In addition, the results of this study provide evidence that our stated-preference double-bounded design has a better-off statistical efficiency than the single-bounded one.

I. INTRODUCTION Institutions of higher education comprise knowledge creation (research) and knowledge dissemination (teaching). Thus, the university's mission is to deliver quality undergraduate and graduate education and to expand the frontier of academic research. Numerous studies (Verry and Layard 1975; Cohn, Rhine, and Santos 1989; deGroot McMahon, and Volkin 1991; Nelson and Hevert 1992; Lloyd, Morgan, and Williams 1993; Dundar and Lewis 1995; Koshal and Koshal 1995, 1999) have investigated, as in the case of firms, the multiple-product cost function of producing the vector of outputs on undergraduate and graduate education and research. The cost structure of higher education is studied via the scale economies and the scope economies of the cost function. However, these measures of scale and scope economies may be elusive if the quality dimension of colleges and universities is not considered. Without taking into account the quality variation, in the short-run, a university can reduce the average cost of operation by lowering the quality. Universities with more congested educational facilities are substituting facility utilization for capital; universities with a higher student/faculty ratio and less research engagement are substituting quality of education for quantity of undergraduate and graduate enrollment. The consequence is an upward bias in estimating the economies of scale and scope. This conclusion is consistent with the early studies of Nelson and Hevert (1992) which showed that failure to control for class size in cost function may result in specification bias, and an economy of scale is evident if class size is allowed to expand. Quality of higher education is multidimensional. Quality in instruction, faculty research, and the quality of educational environment are all significant factors determining the long-run university cost structure and the crucial determinants of the scale and scope economies of higher education. How and to what extent quality affects a university's operating cost depends on the goal and orientation of the institutions. Higher quality increases the university's cost of operation. But, in a large research-oriented university, a disproportional share of the budget often benefits the graduate, not the undergraduate program. It is unrealistic to assume that quality affects only the average cost and that the marginal costs of various educational programs are independent of quality. Quality is unlikely to be simply a neutral cost-shifting factor. The purpose of this paper is to propose a university cost function and a semiparametric-estimating technique that treats quality as a nonneutral cost-shifting factor, which directly affects the marginal cost of outputs in undergraduate and graduate education. More precisely, the marginal costs of outputs are specified as a nonparametric smooth function of quality. A semiparametric specification of university cost is applied to 56 comprehensive and science/technology universities in Taiwan over the period 2000-2003. II. SEMIPARAMETRIC COST FUNCTION AND ESTIMATION TECHNIQUE Following the conventional multiproduct cost specification for higher education (Cohn, Rhine, and Santos 1989; deGroot, McMahon, and Volkin 1991; Lloyd, Morgan, and Williams 1993; Dundar and Lewis 1995; Koshal and Koshal 1995, 1999), the total cost (C) is specified as a quadratic function of outputs, undergraduate and graduate enrollments. However, the quadratic cost function is modified by allowing for the coefficients to be functions of quality in the following form: (1) C = [[beta].sub.0](Q) + [k.summation over i=1] [[beta].sub.i](Q)[Y.sub.i] + (1/2) X [k.summation over i=1], [k.summation over j=1], [[beta].sub.ij](Q)[Y.sub.i][Y.sub.j] + [m.summation over i=1], [[alpha].sub.i][Z.sub.i] + [epsilon] where C is the total cost of producing k educational outputs (Y), and [Z.sub.i] is the ith institutional characteristics. …

In this article, we formulate a behavioural model under uncertainty to estimate Total Factor Productivity (TFP) in the Taiwan banking industry. In particular, the article provides a model based on the safety-first rule under uncertainty to measure the risk premium in banking operations that are subject to loan default and other investment risks. With panel data of 40 banks in 1981–1996, a translog cost function and the associated share equations are used to estimate the dual rate of Total Cost Diminution (TCD), the dual Returns To Scale (RTS) and the derived primal rate of TFP. A constant elasticity of transformation output function is employed to construct an aggregated output index of loan and investment activities. The empirical results indicate zero productivity growth and a highly risk-averse banking industry. Government-owned banks are generally more risk-averse than privately owned banks. As expected, the Taiwan banking industry became more risk-venturesome after the deregulation and liberalization...

1. INTRODUCTION The financial plight and plunging quality of higher education has dominated the current debate about educational reforms in Taiwan. The debate has provided a forum on the issues of the economic behavior of institutions of higher education, including the amalgamation of institutions, in the search for economies of scale, the conglomeration of undergraduate and graduate programs, in the search for economies of scope, and the enormous quality disparity between private the public institutions. The paper aims to illuminate the debate by providing an empirical study on the scale and scope economies by estimating a multi-product university cost structure in Taiwan. The number of colleges and universities in Taiwan has increased rapidly in the last two decades. As of 2003, there were 139 colleges and universities compared with only 26 institutions in 1980. During the same period, the number of college student enrollments increased fivefold, and real educational expenditure per student more than tripled. (1) The variation in unit instructional costs among colleges and universities is substantial. For small institutions, the per-student instruction cost is on average 71% higher than in larger institutions. while public, research-oriented institutions' unit instructional costs are more than twice that of private institutions. (2) The cost differences may be due to the difference in orientation and goals between undergraduate teaching and graduate research. If the larger institutions have lower unit costs. it might be because there are economies of scale and scope. Many empirical studies in the United States and in other developed countries have uncovered factors that account for costs in higher education. However, there are no empirical studies investigating the existence or magnitude of economies of scale and scope or the impact of the dual role of higher education in teaching and in research on the university cost structure in Taiwan. Over the last several decades, the universities in Taiwan have essentially been administered at the discretion of the government. The Ministry of Education oversaw every step of university operations, both in public and in private universities, ranging from student admission and enrollment, faculty hiring and promotion, curriculum design and instruction, to budgeting decisions and administrative appointments. In recent years, the government has gradually lessened its rigid control and allowed universities more administrative and financial independence. This policy change has exerted undue pressure on administrators and policy makers to emphasize productivity, efficiency, and cost-effective management. In this paper, we explore university cost structure by estimating a stochastic frontier cost function. Particular attention is given to the estimation of cost efficiency and to the effect of quality-adjusted outputs on economies of scale and scope. While most empirical studies of higher education production in other countries show some evidence of scale and scope economies, (3) we demonstrate in this paper that they are elusive because the studies have failed to account for quality variation among colleges and universities, in particular, the endogeneity of congestion in facility utilization. In the short run, a university can reduce the average cost of enrollment by tolerating more congested living and learning environments in dormitory rooms and in recreational space, in classrooms and in libraries, etc. Since the congestion factor is endogenous, this leads to a reduced average cost, and it may give a myopic administrator an incentive to engage, at least in the short run, in a policy of overutilizing the university's fixed capital resource. Congestion thus has an implicit long-run cost in higher education production. While many empirical studies have linked the student-faculty ratio and faculty research activity to the quality of university's under-graduate and graduate education, these studies generally ignored how the congestion is linked to the estimation of university cost structure, in particular to scale and scope economies. …

This paper considers the maximum likelihood estimation of a stochastic frontier production function with an interval outcome. We derive an analytical formula for calculating the likelihood function of the interval stochastic frontier models. Monte Carlo experiments reveal that the finite sample performance of our method is promising even though the sample size is relatively moderate. We apply our method to measure the information inefficiency in the labor market for newly graduated college students in Taiwan.

We use data collected from a consumer survey of face-to-face interviews to determine consumer demand for genetically modified (GM) tofu attributes in Taiwan. Conjoint analysis using logit models reveals that, on average, brand is the most important attribute in terms of influence on consumers’ preferences, followed by price, with GM content having the least influence. However, the analysis also reveals three distinct market segments for tofu. Apart from the largest segment (which reflects the average lack of concern about GM food), the remaining two segments are split according to their preference or antipathy towards GM tofu. This result suggests that GM labelling is helpful to Taiwanese tofu consumers.

This study develops a conceptual framework based on the random utility model in order to estimate a consumer's WTP for hypothetical safer seafood (HACCP) in Taiwan. Grouper, milkfish, and oyster were surveyed as the subjects. The average WTP for grouper, milkfish, and oyster with HACCP are about 53.15% (NT$45 per kg), 52% (NT$19 per kg), and 46% (NT$25 per kg) price increments, respectively, over the average price without HACCP (NT$84 per kg, $NT36 per kg, and $NT54 per kg). A high WTP value may imply a strong demand for health and good market potential for safer seafood in Taipei, Taiwan.

In this article, we propose a semiparametric smooth coefficient model as a useful yet flexible specification for studying a general regression relationship with varying coefficients. The article proposes a local least squares method with a kernel weight function to estimate the smooth coefficient function. The consistency of the estimator and its asymptotic normality are established. A simple statistic for testing a parametric model versus the semiparametric smooth coefficient model is proposed. An empirical application of the proposed method is presented with an estimation of the production function of the nonmetal mineral industry in China. The empirical findings show that the intermediate production and management expense has played a vital role and is an unbalanced determinant of the labor and capital elasticities of output in production.

In this paper, a switching regression model is developed to analyze farmers' choice behavior and cost efficiency in field plowing arrangement in Taiwan. We find that the decision on the choice of plowing arrangement is determined by a cost comparison between self-plowing and hired-service, and other non-cost considerations, such as the availability of family labor and machinery, education level, non-farm income, age, and regional effects. Across a spectrum of farmer characteristics, empirical results indicate a potentially substantial cost-savings by hiring service for field plowing than by self-plowing. Self-plowing farmers also subject to a significant level of cost inefficiency.

A limited information estimator for the multivariate ordinal probit model is developed. The main advantage of the estimator is that even for high dimensional models, the estimation procedure requires the evaluation of bivariate normal integrals only. The proposed estimator also avoids the potential problem of encountering local maxima in the estimation process, which is looming using maximum likelihood. The performance of the limited information estimator is shown by Monte Carlo experiments to be excellent and it is comparable to that of the maximum likelihood estimator. Finally, an application of the limited information multivariate ordinal probit to model the consumption level of cigarette, alcohol and betel nut is presented.

A probit model for whether or not consumers are willing to pay a premium for hydroponically grown vegetables (HGV) is estimated jointly with an ordered probit model analyzing the magnitude of such premiums for consumers who would pay them. Results of the joint estimation and the conventional single equation ordered probit model were presented for comparison. Unlike the single equation approach, the joint estimation allows the flexibility of parameterizing separately the probability and level of premiums that a consumer is willing to pay for a safer food. The results show that family health status and household income are the most important and significant factors that determine the amount of premium a consumer is willing to pay for HGV. However, they are insignificant in predicting the likelihood of a consumer's willingness-to-pay a higher price. In addition, marginal probabilities were calculated to assess the influence of various socioeconomic and attitudinal variables on the likelihood that a consumer wou ld be willing to pay a premium for HGV and the additional amount of premiums. Consumers' concerns about use of pesticide chemicals in food production have made food safety a priority issue on the public agenda. Several studies have focused specifically on consumer attitudes toward chemical residues and how the uses of pesticide chemicals affect consumer purchase decisions. For example, in a 1986 survey of Pennsylvania households 71.1 percent of respondents expressed concern about eating fruits and vegetables sprayed or dusted with pesticides (Sachs, Blair, and Richter 1987). By comparison, 41.5 percent of Pennsylvania respondents expressed a similar concern in 1965 (Bealer and Willits 1968). Following the Alar scare in 1989, public concern about the potentially adverse effects of pesticides or their residues on human health rose to an unprecedented level. Dunlap and Beus (1992) reported that 45 percent of their respondents indicated that they believe the use of pesticides for food supply is "somewhat" or "very" unsafe even when they are used properly (according to approved directions) . They suggest that consumers continue to feel and express uneasiness about the safety of using pesticides for production of foods. Consumers' demand for safer foods will translate into market behavior and alter demand for food products in the marketplace. Thus, producers, processors, wholesalers/retailers, and government regulators and policy-makers will have to respond to consumers' risk preferences, concern about environmental quality, and demand for safe foods (Kramer 1990). Previous surveys have consistently found that consumers have perceived both high and increasing levels of health risks about consuming fresh produce due to potential presence of pesticide residues. A more recent national survey conducted by researchers of the University of Kentucky suggests that pesticides pose a lower risk to consumers than does microbial contamination (Buzby and Skees 1994). However, to alleviate consumers' pesticide fears, some food retailers have initiated their own residue-monitoring programs and advertise their produce as being specifically tested for chemical residues. Other food retailers are promoting the sale of organic foods. In a survey of supermarket shoppers, Ott (1990) reported that two out of every three shoppers were willing to pay 5 percent to 10 percent more for fresh produce that is certified free of pesticide residues. Similarly, Buzby and Skees (1994) found that more than half of the respondents indicated a preference to buy organically grown fresh fruits and vegetables and would be willing to pay more for produce that was certified pesticide residue-free. Fresh produce is a very important dietary component in daily food intakes of the Taiwanese. In 1995, annual per capita consumption of fresh vegetables was about 280 lbs. in Taiwan compared with 176 lbs. in the U.S., where a majority of vegetables was consumed in processed forms. …

This paper utilizes the average derivative estimation of Stoker (1986) and the pesudo-likelihood estimation of Fan, Li, and Weersink (1996) to estimate a semiparametric stochastic frontier regression, y = g(x) + e, where the function g(.)is unknown and e is a composite error in a standard setting. The proposed semiparametric method of estimation is applied to data on farmers' credit unions in Taiwan. Empirical results show that the banking services of the farmers' credit unions is subject to economies of scale, but high degree of cost inefficiency in operation.

The purpose of this study is to empirically investigate Taiwanese married women's grocery shopping behavior in relation to their labor force participation status. In this study, focus is limited to their grocery shopping frequency which is meant to be a proxy for an input to household production, i.e., food at home. A Poisson switching regression model is developed to estimate parameters of married women's shopping behavior. The results show that the labor force participation status does have a great impact on time allocation behavior.

A contingent valuation survey was conducted in Taiwan to elicit willingness to pay (WTP) to avoid a recurrence of the episode of acute respiratory illness most recently experienced by the respondent. We estimate a model in which willingness to pay depends on the attributes of the illness (duration and number of symptoms, and nature of the illness) and on respondent characteristics (such as income and health history), and allow mitigating behavior to be endogenously determined with willingness to pay. WTP of Taiwanese households is compared with benefits transfer extrapolations that adjust WTP for the United States by Taiwan household income, relative to U.S. household income.

The purpose of this paper is to estimate consumers’ willingness to pay (WTP) and investigate factors that affect participation in therapy to reduce weight or prevent obesity. As for the decision to participate in obesity prevention therapy, the results show that the price charged for therapy is the key factor. Furthermore, the gender, education, income, the concern that work achievement is affected by obesity, and health condition variables are found to be important and significant determinants of the decision to participate in the therapy. The average willingness to pay for obesity reduction therapy which could reduce weight by 5 kg in 3 months is estimated to be NT$12,531 (US$362) among the sample respondents. The results of the profile analysis suggest that obese females with high education, high income, who think that obesity affects work achievement, and who have tried to control their weight are the most likely to be willing to pay the greatest amount for the weight-reduction therapy.

This paper takes issues with the appropriateness of applying the stochastic frontier analysis (SFA) technique to account for environmental effects and statistical noise in the popular three-stage data envelopment analysis (DEA). A correctly specified SFA model with a censored dependent variable and the associated maximum likelihood estimation (MLE) are proposed. The simulations show that the finite sample performance of the proposed MLE of the censored SFA model is very promising. An empirical example of farmers’ credit unions in Taiwan illustrates the comparison between the censored and standard SFA in accounting for environmental effects and statistical noise.

The objective of this paper is to estimate the cost of obesity's contribution to the metabolic syndrome diseases in Taiwan. We used individual data from the Cardiovascular Disease Risk Factors Two-Township Study survey and medical use and expenditures data from the Bureau of National Health Insurance (NHI) of Taiwan. By adopting the prevalence-based and population attributable risk (PAR) approaches, direct costs of obesity for six kinds of obesity related metabolic syndrome diseases have been estimated. Comorbidities used in our analysis included ischemic heart diseases, congestive heart failure, cerebrovascular disease accident, diabetes, hyper-cholesterolaemia and hypertension. The results indicate that overweight and obesity are associated with a higher prevalence and costs of the metabolic syndrome related diseases. PAR increases as the obese [body mass index (BMI)] prevalence increases. About 4-9% of the costs of those diseases can be attributed to overweight (24or = BMI27) and about 7-13% and 8-19% of such costs are attributable to the first and second degree obesity (27or = BMI30 and BMIor = 30). The cost of obesity derived from the PAR and medical costs of metabolic syndrome diseases accounts for 2.9% of the national total healthcare expenditure. We therefore conclude that overweight and obesity have increased health costs and resulted in higher prevalence of and greater costs from metabolic syndrome related diseases in Taiwan. These findings provide important support for implementing obesity prevention programs in Taiwan.

This study develops a conceptual framework based on the random utility model to estimate smokers' willingness to pay (WTP) for the hypothetical low-lung-cancer-risk cigarettes in Taiwan. Following the approach taken by Viscusi (J Polit Econ 1990; 98: 1253–1269), an individual's subjective risk perception on the probability of developing lung cancer from smoking cigarettes was measured and used in the estimation of demand for safer cigarettes. Other factors that may affect a smoker's purchase decision toward the hypothetically safer cigarettes are also identified. The average WTP for one pack of low-lung-cancer-risk cigarettes is estimated to be NT$44.15, which represents a 152% price increase over the average price of cigarettes currently sold in the market. Copyright © 2004 John Wiley & Sons, Ltd.

The role of agriculture in the post-colonial Taiwanese economy can be roughly divided into two stages. In the first stage, 1945–1973, agriculture acted as a supporting sector providing vital resources to the rest of the economy. This part of the story is well documented by Professor Thorbecke (1979). In the second stage, 1973-1995, agriculture became a dependent and protected sector, drawing resources from the general economy. As the Taiwanese economy gained maturation, more attention was given to agriculture’s role in providing environmental and public services other than the traditional food and agricultural services. How and to what extent should agriculture play its role lies in the social benefits it contributes weighted against the costs the society has to pay for protecting it. This changing role of agriculture simply reflects the requirements of a more mature Taiwanese economy in balancing and achieving its multiple objectives of material well-being as well as quality of life.