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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 158:
A Multiple Output Stochastic Ray Frontier Production Model

Mickael Löthgren ()

Abstract: This paper proposes an approach to specify and estimate multiple input, multiple output production frontiers and technical efficiency using a stochastic ray frontier production model A possible model extension is to incorporate a technical efficiency effects model to allow estimation of the effects of various explanatory variables on technical efficiency. An empirical application using Swedish health care data reveals a significant positive effect on technical efficiency of an "internal market" reform while the effect on the production frontier is negative. Technical change is found to be positive while technical efficiency has decreased over time.

Keywords: Composed error model; distance function; panel data; stochastic ray frontier model; technical change; technical efficiency; (follow links to similar papers)

JEL-Codes: C12; C13; C21; C23; D24; (follow links to similar papers)

15 pages, February 1997

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This paper is published as:
Löthgren, Mickael, (2000), 'Specification and Estimation of Stochastic Multiple-Output Production and Technical Inefficiency', Applied Economics, Vol. 32, pages 1533-1540



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