A command to fit spatial stochastic frontier models with inefficiency spillovers

Kerui Du (), Federica Galli () and Luojia Wang ()
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Kerui Du: Xiamen University
Federica Galli: University of Bologna
Luojia Wang: Xiamen University

Stata Journal, 2025, vol. 25, issue 1, 189-211

Abstract: The interdependence among decision-making units challenges the as- sumption of cross-sectional independence in traditional stochastic frontier models. Based on the seminal spatial Durbin specification for the frontier function, Galli (2023, Journal of the Royal Statistical Society, C ser., 72: 346–367) introduced inefficiency spillovers to measure neighborhood effects related to the inefficiency determinants. This article presents a new command, sfsd, that fits the comprehen- sive spatial stochastic frontier model that Galli (2023) proposed, accommodating various spatial and nonspatial specifications in both the frontier and the ineffi- ciency equations. sfsd is the first command that includes different typologies of spatial spillovers in a stochastic frontier framework, facilitating the investigation of contemporary research topics such as agglomeration and technology diffusion at both the firm and the regional levels. The description, options, and illustrative examples for the command are outlined in this article.

Keywords: sfsd; spatial stochastic frontier models; spillover effects; tech- nical efficiency; inefficiency spillovers (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1177/1536867X251322970

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