Analysis on the individual efficiency prediction in the composed error frontier model. A Monte Carlo study.
This study seeks to analyse some important questions related to the Stochastic Frontier Model, such as the method proposed by Jondrow et al (1982) to separate the error term into its two components, and the measure of efficiency given by Timmer (1971). To this purpose, a Monte Carlo experiment has been carried out using the Half-Normal and Normal-Exponential specifications throughout the rank of the γ parameter. The estimation errors have been eliminated, so that the intrinsic variability of the...