Stochastic Frontier meets Breakdown Frontier
Santiago Acerenza, Francisco Rosas
TLDR
This paper introduces a sensitivity analysis for Stochastic Frontier Models, deriving the breakdown frontier for average inefficiency under relaxed assumptions.
Key contributions
- Conducts sensitivity analysis for Stochastic Frontier Models (SFM).
- Characterizes identified sets under relaxed SFM baseline assumptions.
- Derives the breakdown frontier for average production unit inefficiency.
- Provides an application on a known dataset with open-source code.
Why it matters
This work enhances the robustness of Stochastic Frontier Models by providing a method for sensitivity analysis. It helps practitioners understand the impact of assumption violations on inefficiency estimates, offering more reliable insights for economic analysis.
Original Abstract
This paper studies sensitivity analysis of Stochastic Frontier Models. We elaborate relaxations of the baseline assumptions in the Stochastic Frontier Models and characterize the identified set under this relaxations. Furthermore, we derive the breakdown frontier for a relevant parameter of interest, the average inefficiency of a production unit. We show an application of the procedures on a well known dataset, and make the code available for the interested practitioner.
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