# Frontier and Efficiency Analysis: Stochastic Frontier Analysis and Data Envelopment Analysis

LIMDEP and NLOGIT are the only programs that provide tools for both stochastic frontier analysis and data envelopment analysis.

## Stochastic Frontier Analysis

**Model frameworks for production or cost**

- Corrected OLS
- Normal-half normal
- Normal-truncated normal
- Normal-exponential
- Normal-gamma
- Normal-Rayleigh
- Semiparametric LOWESS
- Sample selection

**Mean of the one sided (inefficiency) component**

- E[U] = zero mean, the standard case
- E[U] = nonzero constant mean
- E[U] =
**a'z**

**Variance of the one sided (inefficiency) component**

- Var[U] = homoscedastic
- Var[U] = exp(
**c'z**) (heteroscedastic)

**Variance of the firm specific (symmetric) component**

- Var[v] = homoscedastic
- Var[v] = exp(
**d'w**) (heteroscedastic)

Doubly heteroscedastic

Estimates of inefficiency measures automatically computed with all formulationsPartial effects of environmental variables on inefficiency

**Panel data formulations**

- Random effects in specifications
- Pitt and Lee time invariant
- True random effects
- Fixed effects
- Schmidt and Sickles
- True fixed effects in production or cost function
- Truncation model with fixed effects
- Fixed effects in mean of one sided component
- Fixed effects in variance of one sided component
- Method of moments for TFE
- Random parameters
- Generalized true random effects
- Latent class
- Zero inefficiency latent class
- Sample selection
- Battese and Coelli panel data models

## Data Envelopment Analysis

Analysis in parallel with stochastic frontier estimation and analysis (the only package available that has both of these methods in one program)

- Input and output oriented inefficiency – retained in the data set for further analysis
- Constant, increasing or nonincreasing returns to scale
- Economic and allocative inefficiency
- Bootstrapped confidence intervals for efficiency scores
- Malmquist total factor productivity indexes for panel data
- Listing of ‘peer’ firms with results