MEASUREMENT OF FIRM-SPECIFIC TECHNICAL EFFICIENCY: A COMPARISON OF METHODS

Various procedures have been used for the measurement of firm-specific technical efficiency. Most commonly used methods are static and deterministic. Deterministic methods tend to yield biased estimates of technical efficiency and to overestimate the variability of technical efficiency over time. These conclusions are illustrated by applying stochastic frontier production function analysis and corrected ordinary least squares procedures to farm data from Sri Lanka.