Frontier Production Functions and Technical Efficiency Measures |
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| Authors: | K P Kalirajan & R T Shand |
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| Institution: | The Australian National University |
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| Abstract: | The concept of technical efficiency is central to measuring the firm performance. The measurement of technical efficiency has proved difficult and complex, and the literature provides a range of methodologies. This paper reviews the various methodologies for measuring technical efficiency and offers a comparison between established methods of measurements. The discussion is literary with less mathematical jargons and equations. The objective of this paper is not to be exhaustive, but to be up‐to‐date and to provide a significant discussion on some of the core methods of measuring technical efficiency. |
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| Keywords: | Technical efficiency Frontier production function Random coefficient regression model Parametric and non-parametric models Bayesian frontier approach |
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