Abstract
In the stochastic frontier model, we extend the multivariate probability statements of Horrace (J Econom, 126:335–354, 2005) to calculate the conditional probability that a firm is any particular efficiency rank in the sample. From this, we construct the conditional expected efficiency rank for each firm. Compared to the traditional ranked efficiency point estimates, firm-level conditional expected ranks are more informative about the degree of uncertainty of the ranking. The conditional expected ranks may be useful for empiricists. A Monte Carlo study and an empirical example are provided.
Original language | English (US) |
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Pages (from-to) | 829-848 |
Number of pages | 20 |
Journal | Empirical Economics |
Volume | 48 |
Issue number | 2 |
DOIs | |
State | Published - Mar 2015 |
Keywords
- Efficiency estimation
- Multiplicity
- Multivariate inference
- Order statistics
ASJC Scopus subject areas
- Statistics and Probability
- Mathematics (miscellaneous)
- Social Sciences (miscellaneous)
- Economics and Econometrics