Stationary Points for Parametric Stochastic Frontier Models

Abstract

The results of Waldman (1982) on the Normal-Half Normal stochastic frontier model are generalized using the theory of the Dirac delta (Dirac, 1930), and distribution-free conditions are established to ensure a stationary point in the likelihood as the variance of the inefficiency distribution goes to zero. Stability of the stationary point and wrong skew results are derived or simulated for common parametric assumptions on the model. Identification is discussed

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