Nonparametric frontier estimation: a robust approach

Most nonparametric methods for estimating production frontiers (data envelopment analysis and free disposal hall (FDH)) are based on envelopment techniques. Statistical inference based on these estimators is available but, by construction, they are very sensitive to extreme values or outliers. We propose a nonparametric estimator, which is more robust to these extreme values. It is based on a concept of expected minimum input function (or expected maximal output function). We show how this function is related to the efficient frontier itself. The resulting estimator is related to the FDH estimator but it will not envelop all the data. The asymptotic theory is provided. Our approach includes the multiple input and multiple output cases. (C) 2002 Elsevier Science S.A. All rights reserved.