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Aigner, Dennis; Lovell, C.A. Knox; Schmidt, Peter
Journal of econometrics, March 2023, 2023-03-00, Letnik: 234Journal Article
Previous studies of the so-called frontier production function have not utilized an adequate characterization of the disturbance term for such a model. In this paper we provide an appropriate specification, by defining the disturbance term as the sum of symmetric normal and (negative) half-normal random variables. Various aspects of maximum-likelihood estimation for the coefficients of a production function with an additive disturbance term of this sort are then considered.
