International Journal of Business and Economics Volume 1, No. 2 August, 2002

Technology Gap, Efficiency, and a Stochastic Metafrontier Function

George E. Battese

University of New England, Australia

D. S. Prasada Rao

University of New England, Australia

Abstract

This paper considers a stochastic metafrontier function to investigate the technical efficiencies of firms in different groups that may not have the same technology. A decomposition of output is presented involving the technology gap and technical efficiency ratios for firms in a group relative to the best practice in the industry.

Keywords：efficiencies, stochastic metafrontier, technology gap.

JEL Classifications：C5, D24.

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