A stochastic frontier model based on Rayleigh distribution


In this paper, we present a closed formula for calculating the density of the composed error in a stochastic frontier model, having supposed that technical inefficiency components follow a Rayleigh probability distribution. Moreover, by using a Monte Carlo procedure, we analyze the properties of Maximum Likelihood and Method of Moments estimators of the disturbance terms.

DOI Code: 10.1285/i20705948v7n2p218

Keywords: Stochastic frontier analysis, Rayleigh distribution, Monte Carlo methods


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