Stochastic frontiers incorporating exogenous influences on efficiency

Simar, LĂ©opold;Lovell, C.A.K.;Vanden Eeckaut, Philippe
(1994) , 14 pages

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Authors
  • Simar, LĂ©opoldUCLouvain
    Author
  • Lovell, C.A.K.University of Georgia
    Author
  • Vanden Eeckaut, PhilippeUCLouvain
    Author
Abstract
Until very recently, the incorporation of exogenous variables in the analysis of productive efficiency relative to a stochastic frontier was an arbitrary process. The practitioner had to assume that these variables were influencing either the structure of production possibilities or the degree of productive inefficiency. This paper proposes an alternative model which allows exogenous variables to influence both the structure of production possibilities and the degree of productive inefficiency. This new approach to the incorporation of exogenous influences on productive efficiency overcomes some of the economic and statistical problems that plague previous approaches.
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Simar, L., Lovell, C. A. K., & Vanden Eeckaut, P. (1994). Stochastic frontiers incorporating exogenous influences on efficiency (STAT Discussion Papers 9403). https://hdl.handle.net/2078.5/33372