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International Journal of Business and Economics

International Journal of Business and Economics
Volume 10, No. 1

April, 2011
 
On the Distribution of Estimated Technical Efficiency in Stochastic Frontier Models: Revisited
 
Anup Kumar Bhandari
Centre for Development Studies, India
 
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.
 
Keywords:stochastic frontier, inefficiency error, estimated technical efficiency, leather industry.
 
JEL Classifications:C34, D24.
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