Practical illustrations of the two recent contributions to stochastic frontier models

Yoshihiko Tsukuda, Tatsuyoshi Miyakoshi

Research output: Contribution to journalArticlepeer-review

Abstract

In a recent year, the conditional expectation for technical inefficiency (i.e., the predictor) in stochastic frontier production models and its confidence interval are proved to be increasing in the individual firm's inefficiency effect, which is defined as the mean of the normal distribution that is truncated at zero. This paper illustrates how the two recent contributions work in practice and how these findings are significant, by using the Battese and Coelli (1995) type specification and giving an empirical study on the Japanese pharmaceutical industry.

Original languageEnglish
Pages (from-to)229-233
Number of pages5
JournalApplied Economics Letters
Volume13
Issue number4
DOIs
Publication statusPublished - 2006 Mar 15

ASJC Scopus subject areas

  • Economics and Econometrics

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