Institute of Economic Research, Seoul National University
Abstract
This paper summarizes the literature on stochastic frontier
production function models. It covers the definition of technical
efficiency, the basic cross-sectional stochastic frontier model, and
the stochastic frontier model with panel data and time-invariant
as well as time-varying technical inefficiency. It also discusses
models in which technical inefficiency depends on explanatory
variables. Finally, it discusses the problem of inference on the
inefficiencies and makes some predictions about likely future developments
in the field
