Estimation of Stochastic Cost and Production Frontiers: Efficiency Estimation

The study estimates efficiency magnitudes by applying LPP technic and compare them with their Stochastic Counterparts. The proposed study combines timeseries, cross section observations on Inputs, Input prices, outputs, derives factor minimal cost functions and formulates the Likelihood functions and maximise them to find MLEs of known parameters. This kind of research study can be further extended to any other functional forms like CES and TRANSLOG production functions etc., with comfortable ease.