Central limit theorems for conditional efficiency measures and tests of the ‘separability’ condition in non-parametric, two-stage models of production
In this paper, we demonstrate that standard central limit theorem (CLT) results do not hold for means of non-parametric, conditional efficiency estimators, and we provide new CLTs that permit applied researchers to make valid inference about mean conditional efficiency or to compare mean efficiency across groups of producers. The new CLTs are used to develop a test of the restrictive ‘separability’ condition that is necessary for second-stage regressions of efficiency estimates on environmental variables.