Handling losses in translog profit models

J.W.B. Bos, M. Koetter

Research output: Contribution to journalArticleAcademicpeer-review

19 Citations (Scopus)

Abstract

In this article, we compare standard approaches used to handle losses in logarithmic profit models with a simple novel approach. We estimate translog stochastic profit frontiers, and discuss discriminatory power, rank stability and the precision of profit efficiency (pe) scores. Contrary to existing methods, our approach does not result in a loss of observations. Our new method enhances rank stability and discriminatory power, and improves the precision of pe scores.
Original languageEnglish
Pages (from-to)307-312
Number of pages6
JournalApplied Economics
Volume43
Issue number3
DOIs
Publication statusPublished - 1 Jan 2011

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