We explore practical methods of carrying out Lagrange Multiplier tests for variance components in two models in which the derivatives needed for the test are identically zero at the restricted estimates, the random effects probit model and the stochastic frontier model. The techniques are illustrated with two applications.

Finite mixture estimation (FME) is compared to estimated generalized least squares (EGLS) in the estimation of economies of size and production cost frontiers for Alabama dairy farms. FME provides several unique insights into the economic forces behind recent changes in Alabama’s dairy industry. FME provides estimation of a stochastic average cost frontier with known statisticalproperties, whic...

Achieving high production with limited resources is a major challenge faced by poultry farmers in countries developing economies, such as Pakistan. Optimization of the technical efficiency (TE) business operations promising strategy. A representative sample 210 farms province Punjab Pakistan was analyzed for TE. The studied comprised 105 layer chicken (battery cage system, egg production) and b...

Literature of productive efficiency analysis is currently divided between two main paradigms: the parametric Stochastic Frontier Analysis (SFA) and the deterministic, nonparametric Data Envelopment Analysis (DEA). This paper develops a new encompassing framework that melds the SFA-style stochastic composite error term to the DEA-type nonparametric frontier that satisfies monotonicity and concav...

the energy efficiency, greenhouse gas (ghg) emissions, and carbon efficiency of paddy rice production were analysed in sari in the mazandaran province of iran during 2011–2012. data was collected through questionnaires and interviews with paddy producers. the results showed that the net energy gain was 27,932 mj ha-1 and energy efficiency was 1.83 during production. the results of the cobb-doug...

In this paper an attempt is made to explain the basic concept of efficiency, frontier production function, technical efficiency, deterministic frontier, and stochastic frontier. Efficiency of a firm/industry refers to its performance in the utilization of resources at its disposal and is a relative concept. Technical efficiency of a production function is defined as the maximum quantity of outp...

A lot is known about the Hölder regularity of stochastic processes, in particular in the case of Gaussian processes. Recently, a finer analysis of the local regularity of functions, termed 2-microlocal analysis, has been introduced in a de-terministic frame: through the computation of the so-called 2-microlocal frontier, it allows in particular to predict the evolution of regularity under the a...

document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. * I would like to thank Peter Schmidt and Bob Myers for their suggestions and guidance. Thanks also go to Thomas Jayne for generously providing me the data, Zhiying Xu, and especially Margaret Beaver for helping me understand the data. All remaining errors and omissions are my own.

Due to the assumption that the best practice methods refer to each input separately instead of the whole set of inputs used by a firm, the benchmark technology as defined in the stochastic varying coefficient frontier model may be infeasible and theoretically improper whenever the maximum response coefficients are not coming from the same production unit. To overcome this problem we suggest an ...