MULTIPLE COMPARISONS WITH THE BEST: BAYESIAN PRECISION MEASURES OF EFFICIENCY RANKINGS

Prior to estimation, several sets of parametric restrictions are imposed on (4.9). We
impose symmetry, linear homogeneity in input quantities, and constrain βf_q , ∀q, to equal
zero for one firm in order to achieve identification. Symmetry requires that

Ymm' = Ym'm, ∀ m, m', m = m'

Yzz' = Yz'z, ∀ z,z', z = z'

Ynn' = Yn'n, ∀ n,n', n = n.                            (4.14)

In addition, linear homogeneity in input quantities implies

Yn=1,
n

£ Ynn' = £ Ynn' =£ £ Ynn' =0,

Ymn = 0, ∀ m,
n

Yzn = 0, ∀ z, and
n

Ynt =0.

n

Finally, identification requires that βfq, ∀q, must be constrained for one firm in (4.11).

4.2 Data

Our dataset is an updated and refined version of the panel of utilities originally an-
alyzed by Nelson (1984).³ Subsets of that data were used by Baltagi and Griffin (1988)
and Callan (1991). The sample used here is comprised of 43 privately owned U.S. electric

³ We are grateful to Professor Nelson for making his data available to us.

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