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Stochastic metafrontiers

Christine Amsler, Christopher J. O’Donnell and Peter Schmidt
Authors registered in the RePEc Author Service: Christopher John O'Donnell

Econometric Reviews, 2017, vol. 36, issue 6-9, 1007-1020

Abstract: We consider the case of production units arranged into a number of groups. All units within a group choose output–input combinations from the same production possibilities set that is represented by a stochastic frontier model. The metafrontier is the envelope of the group-specific frontiers. We are interested in the metafrontier distance, which is the amount by which the group-specific frontier lies below the metafrontier.Previous work has measured the metafrontier distance using the deterministic portion of the frontier. In a stochastic frontier model, this is not appropriate. We show how to evaluate the metafrontier distance, and we demonstrate the empirical relevance of this issue.

Date: 2017
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Citations: View citations in EconPapers (12)

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DOI: 10.1080/07474938.2017.1308345

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