Expected efficiency ranks from parametric stochastic frontier models

William Horrace, Seth Richards-Shubik () and Ian Wright

Empirical Economics, 2015, vol. 48, issue 2, 829-848

Abstract: In the stochastic frontier model, we extend the multivariate probability statements of Horrace (J Econom, 126:335–354, 2005 ) to calculate the conditional probability that a firm is any particular efficiency rank in the sample. From this, we construct the conditional expected efficiency rank for each firm. Compared to the traditional ranked efficiency point estimates, firm-level conditional expected ranks are more informative about the degree of uncertainty of the ranking. The conditional expected ranks may be useful for empiricists. A Monte Carlo study and an empirical example are provided. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Efficiency estimation; Order statistics; Multivariate inference; Multiplicity; C12; C16; C44; D24 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Expected Efficiency Ranks From Parametric Stochastic Fronteir Models (2013)
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DOI: 10.1007/s00181-014-0808-8

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