Stochastic Frontier Analysis

Marcelo Piemonte Ribeiro

Chapter 110 in Elgar Encyclopedia of Energy Economics, 2025, pp 425-428 from Edward Elgar Publishing

Abstract: Efficiency pertains to executing a specific task with the lowest feasible amount of resources. At the heart of policy discussions on climate change is the concept of energy efficiency. However, the diverse methodologies used to evaluate it complicate comparisons, often leading to inaccuracies. This note presents the Stochastic Frontier Analysis (SFA) approach as a method for assessing energy efficiency. It measures energy efficiency by calculating the gap between countries’, households’, or firms’ actual energy usage and their optimal energy consumption levels given their input levels and characteristics. This entry elaborates on the essence of SFA, explores its various models and specifications, elucidates the process of its application, and provides insights into its practical deployment.

Keywords: Energy; Efficiency; Stochastic; Frontier; Gap (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035310364
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