Stochastic Production Frontier and Technical Inefficiency: A Sensitivity Analysis
The present paper focuses attention on the sensitivity of technical inefficiency to most commonly used one-sided distributions of the inefficiency error term, namely the truncated normal, the half-normal, and the exponential distributions. A generalized version of the half-normal, which does not embody the zero-mean restriction, is also explored. For each distribution, the likelihood function and the counterpart of the estimator of technical efficiency are explicitly stated (Jondrow, J., Lovell, C. A. K., Materov, I. S., Schmidt, P. (), On estimation of technical inefficiency in the stochastic frontier production function model, J. Econometrics 19:233-238). Based on our panel data set, related to Tunisian manufacturing firms over the period 1983-1993, formal tests lead to a strong rejection of the zero-mean restriction embodied in the half normal distribution. Our main conclusion is that the degree of measured inefficiency is very sensitive to the postulated assumptions about the distribution of the one-sided error term. The estimated inefficiency indices are, however, unaffected by the choice of the functional form for the production function.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 22 (2003)
Issue (Month): 1 (February)
|Contact details of provider:|| Web page: http://www.tandfonline.com/LECR20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/LECR20|
When requesting a correction, please mention this item's handle: RePEc:taf:emetrv:v:22:y:2003:i:1:p:79-91. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.