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Estimation of a non-neutral stochastic frontier production function

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Abstract

This article proposed a hybrid of a stochastic frontier regression. The proposed model and estimation differ from the conventional model of Aigner, Lovell, and Schmidt. The model combines a stochastic frontier regression and a truncated regression to estimate the production frontier with non-neutral shifting of the average production function. The truncated regression identifies the sources of efficiency. The article presents empirical evidence of non-neutral effects of the firm's characteristics—the age of the firms, the export ratio, and the R&D expenditure—on the frontier production function and production efficiency in the Taiwan's electronics industry.

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Authors and Affiliations

  1. Department of Economics, Vanderbilt University, 37235, Nashville, Tennessee

    Clief J. Huang

  2. Department and Graduate Institute of Economics, National Taiwan University, Taipei, Taiwan

    Jin-Tan Liu

  3. Institute of Economics, Academia Sinica, Taipei, Taiwan

    Jin-Tan Liu

Authors
  1. Clief J. Huang
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  2. Jin-Tan Liu
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Additional information

We would like to express appreciation to George E. Battese, the associate editor, and anonymous referees for various comments and suggestions. The research was partially supported by the University Research Council of Vanderbilt University, and the Sun Yat-Sen Institute for Social Sciences and Philosophy of Academia Sinica, Taiwan. Residual errors are ours alone.

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Huang, C.J., Liu, JT. Estimation of a non-neutral stochastic frontier production function. J Prod Anal 5, 171–180 (1994). https://doi.org/10.1007/BF01073853

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  • DOI: https://doi.org/10.1007/BF01073853

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