Re: st: Calculating Technical efficiency

[Nabin Kafle <nkafle89@gmail.com>]

"Coelli, T., Perelman, S., Romano, E., 1999. Accounting for
environmental influences in stochastic frontier models: with
application to international airlines. Journal of Productivity
Analysis 11, 251-273" describes a process of estimating the gross
efficiency.

One may also obtain measures of gross efficiency (i.e.,inclusive of
environmental influences) by re-evaluating the technical efficiency
predictors with summation(Az) replaced with max{summation(Az)} where A
is the constant and z is the environmental variable. Thus all firms
will be compared with the frontier associated with the most favourable
environment.

The predictor is TE=E[exp(u)|e]. Can you explain me how can I replace
"summation(Az)" with "max{summation(Az)}" in the predictor.

On Mon, Jul 8, 2013 at 12:26 PM, Nabin Kafle <nkafle89@gmail.com> wrote:
> "Coelli, T., Perelman, S., Romano, E., 1999. Accounting for
> environmental influences in stochastic frontier models: with
> application to international airlines. Journal of Productivity
> Analysis 11, 251-273" describes a process of estimating the gross
> efficiency.
>
> On Mon, Jul 8, 2013 at 9:39 AM, Nabin Kafle <nkafle89@gmail.com> wrote:
>> Well that is the case when the exogeneous variables are considered to affect
>> the efficiency. I want the gross efficiency when exogeneous variable are
>> assumed to affect the shape of production texhnology.
>>
>>
>> On Monday, July 8, 2013, Federico Belotti wrote:
>>>
>>> Assuming that you are using the official -frontier- command for
>>> cross-sectional SF models through
>>>
>>> frontier y x, dist(t) cm(z)
>>>
>>> you are simultaneously estimating a SF production model and a conditional
>>> mean model in which
>>> the mean of the truncated-normally distributed inefficiency is modeled as
>>> a linear function of a specific set of covariates.
>>> In this case, the postestimation command
>>>
>>> predict te, te
>>>
>>> will automatically compute unit technical efficiencies using the Batese
>>> and Coelli (1988) estimator in which the
>>> conditional mean model is explicitly taken into account. The same is true
>>> in the case of technical inefficiency using
>>>
>>> predict u, u
>>>
>>> For more details, take a look at the Stata [R] Base Reference manual,
>>> chapter "frontier — Stochastic frontier models",
>>> section "Methods and formulas".
>>>
>>> Best,
>>> Federico
>>>
>>> On Jul 8, 2013, at 8:22 AM, Nabin Kafle wrote:
>>>
>>> > I want to calculate the technical efficiency from stochastic frontier.
>>> > I want to include the exogeneous variables time and price as directly
>>> > as a regressor i.e assume the exogenous variables affect the shape of
>>> > the production technology. Now after running the frontier command, i
>>> > can use "predict ...,te" to calculate the efficiency net of the
>>> > exogenous variable. How can I calculate the gross inefficiency?
>>> >
>>> > Thanks in advance for your kind help
>>> > *
>>> > *   For searches and help try:
>>> > *   http://www.stata.com/help.cgi?search
>>> > *   http://www.stata.com/support/faqs/resources/statalist-faq/
>>> > *   http://www.ats.ucla.edu/stat/stata/
>>>
>>> --
>>> Federico Belotti, PhD
>>> Research Fellow
>>> Centre for Economics and International Studies
>>> University of Rome Tor Vergata
>>> tel/fax: +39 06 7259 5627
>>> e-mail: federico.belotti@uniroma2.it
>>> web: http://www.econometrics.it
>>>
>>>
>>> *
>>> *   For searches and help try:
>>> *   http://www.stata.com/help.cgi?search
>>> *   http://www.stata.com/support/faqs/resources/statalist-faq/
>>> *   http://www.ats.ucla.edu/stat/stata/

*
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