On the Estimation of the Determinants of Technical Inefficiency in the Stochastic Frontier Production Function Model

• Activity Number: 411
• Type: Contributed
• Date/Time: Tuesday, August 3, 2010 : 2:00 PM to 3:50 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Seongho Song*+ and Chansoo Kim and David Taesok Yi and Younshik Chung
• Companies: University of Cincinnati and Kongju National University and Xavier University and Pusan National University
• Keywords: Stochatic Frontier Model ; Technical Inefficiency ; Generalized Simultaneous Estimation

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 general 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.