This paper investigates the holdup problem in the dynamic search market where buyers and sellers search for their trading partners and specific investments are made after match but before trade. We show that frictionless (competitive) market imposes severe limitations on attainable efficiencies: Markets with small friction make the holdup problem more serious than those with large friction beca...

One of the main purposes of the frontier literature is to estimate inefficiency. Given this objective, it is unfortunate that the issue of estimating “firm-specific” inefficiency in cross sectional context has not received much attention. To estimate firm-specific (technical) inefficiency, the standard procedure is to use the mean of the inefficiency term conditional on the entire composed erro...

In this study we analyze the evolution of operating cost inefficiency for the English and Welsh water industry over the period 1995-2001 by estimating an heteroskedastic stochastic variable cost frontier. The main aim of this paper is to provide an overall picture of the industry cost inefficiency, as we consider both the water and sewerage companies and the smaller water only companies. The ma...