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A Note on Theory of Productive Efficiency and Stochastic Frontier Models

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  • Aikaterini Kokkinou

Abstract

Neoclassical economics assume that producers in an economy always operate efficiently, however in real terms, producers are not always fully efficient. This difference may be explained both in terms of efficiency, as well as unforeseen exogenous shocks outside the producer control. This paper aims to analyse the productive efficiency estimation through a stochastic frontier analysis approach. Particularly, this paper attempts to examine systematically the theoretical background of stochastic frontier function estimation, focusing on the analysis of the efficiency function, in order to provide a solid background for productive efficiency estimation.

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  • Aikaterini Kokkinou, 2010. "A Note on Theory of Productive Efficiency and Stochastic Frontier Models," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 109-118.
    • Handle: RePEc:ers:journl:v:xiii:y:2010:i:4:p:109-118
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    More about this item

    Keywords

    Stochastic Frontier Analysis; Productive Efficiency Function; Efficiency;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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