Handling Losses in Translog Profit Models

SOM Research Reports, Forthcoming

9 Pages Posted: 18 Feb 2007

See all articles by Jaap W.B. Bos

Jaap W.B. Bos

Maastricht University

Michael Koetter

Halle Institute for Economic Research

Abstract

In this paper, we compare standard approaches used to handle losses in logarithmic stochastic profit frontier models with a simple novel approach. We discuss discriminatory power, rank stability and precision of profit efficiency scores. Our new method enhances rank stability and discriminatory power, and improves the precision of profit efficiency scores.

Keywords: profit efficiency, stochastic frontier analysis, truncation and censoring

JEL Classification: G21, C24

Suggested Citation

Bos, Jaap W.B. and Koetter, Michael, Handling Losses in Translog Profit Models. SOM Research Reports, Forthcoming, Available at SSRN: https://ssrn.com/abstract=963663

Jaap W.B. Bos

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

Michael Koetter (Contact Author)

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

HOME PAGE: http://www.iwh-halle.de/en/about-the-iwh/people/detail/michael-koetter/

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