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On the Distribution of Estimated Technical Efficiency in Stochastic Frontier Models: Revisited

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  • Anup Kumar Bhandari

    (Centre for Development Studies, IndiaUniversity, U.K.)

Abstract

Both theoretical and empirical literatures on the stochastic frontier production model have been substantially enriched since 1977. However, attempts to derive the distribution of the estimated one-sided error term, even under restricted assumptions, have only recently been provided. This study attempts to derive the distribution of the estimated one-sided inefficiency error and several important statistical properties under fairly general assumptions. We also derive the distribution of estimated technical efficiency and provide an empirical illustration.

Suggested Citation

  • Anup Kumar Bhandari, 2011. "On the Distribution of Estimated Technical Efficiency in Stochastic Frontier Models: Revisited," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 10(1), pages 69-80, April.
  • Handle: RePEc:ijb:journl:v:10:y:2011:i:1:p:69-80
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    Citations

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    Cited by:

    1. Gavilan, Jose M. & Ortega Irizo, Fco. Javier, 2015. "On the Ability to Disentangle the Two Errors in the Normal/Half-Normal Stochastic Frontier Model /Sobre la capacidad de separar los dos errores en el modelo de frontera estocástica normal/half-normal," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 33, pages 619-632, Mayo.
    2. Gómez-Gallego, Juan Cándido & Gómez-García, Juan & Pérez-Cárceles, María Concepción, 2012. "Appropriate Distribution of Cost Inefficiency Estimates as Predictor of Financial Instability /La distribución de la ineficiencia estimada como predictor de inestabilidad financiera," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 1071(12.)-1, Diciembre.

    More about this item

    Keywords

    stochastic frontier; inefficiency error; estimated technical efficiency; leather industry;

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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