Bayesian Link Model for Ineffcient E ffects in Stochastic Frontier Production Function

• Activity Number: 404 - Bayesian Clustering and Classification
• Type: Contributed
• Date/Time: Tuesday, August 1, 2017 : 2:00 PM to 3:50 PM
• Sponsor: Section on Bayesian Statistical Science
• Author(s): Seongho Song* and Younshik Chung and David T. Yi and Myoungjin Jung
• Companies: University of Cincinnati and Pusan National University and Xavier University and Pusan National University
• Keywords: Bayesian Link Model ; Technical Efficiency ; Stochastic Frontier model ; Simultaneous Estimation ; Markov Chain Monte Carlo

Abstract

A stochastic frontier production function has been considered in the case that there is the non-negative technical inefficiency effects in the data. In the past decades, many studies have been discussed to determine the explanatory variables which affect the technical inefficiency effects in the stochastic frontier production function. The methods in Battese and Coelli (1995) using the appropriate truncated normal distribution as the distribution of the inefficiency effects has been widely used. We propose the generalized models for the technical inefficiency effects involved in the stochastic frontier production functions and estimate the model parameters in the stochastic frontier model as well as the inefficiency model simultaneously.