On the Distribution of Estimated Technical Efficiency in Stochastic Frontier Models: Revisited

Both theoretical and empirical literatures on the stochastic frontier production model have been substantially enriched since 1977. However, attempts to derive the distribution of the estimated one-sided error term, even under restricted assumptions, have only recently been provided. This study attempts to derive the distribution of the estimated one-sided inefficiency error and several important statistical properties under fairly general assumptions. We also derive the distribution of estimated technical efficiency and provide an empirical illustration.