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Stochastic frontier models with random coefficients

Author

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  • Efthymios G. Tsionas

    (Department of Economics, Athens University of Economics and Business, 104 34 Athens, Greece)

Abstract

The paper proposes a stochastic frontier model with random coefficients to separate technical inefficiency from technological differences across firms, and free the frontier model from the restrictive assumption that all firms must share exactly the same technological possibilities. Inference procedures for the new model are developed based on Bayesian techniques, and computations are performed using Gibbs sampling with data augmentation to allow finite-sample inference for underlying parameters and latent efficiencies. An empirical example illustrates the procedure. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • Efthymios G. Tsionas, 2002. "Stochastic frontier models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 127-147.
  • Handle: RePEc:jae:japmet:v:17:y:2002:i:2:p:127-147
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    References listed on IDEAS

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    1. Kalirajan, K P & Shand, R T, 1999. "Frontier Production Functions and Technical Efficiency Measures," Journal of Economic Surveys, Wiley Blackwell, vol. 13(2), pages 149-172, April.
    2. Koop, Gary & Osiewalski, Jacek & Steel, Mark F. J., 1997. "Bayesian efficiency analysis through individual effects: Hospital cost frontiers," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 77-105.
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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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