One way of thinking about is should these factors such farm size and tree
age affect the degree of technical inefficiency or shape of the production
function. In previous Statalist message
(http://www.stata.com/statalist/archive/2003-07/msg00349.html) I wrote:
...do you include these fixed effects (and/or other factors) in
production function or in the inefficiency equation (using -uhet-
you can possibly solves two problems at once - correcting for
heteroskedasticity and incorporating environmental factors on
efficiency, see Kumbhakar and Lovell, 2000).
One approach, following Good et al. (1993), embeds environmental factors
directly into the production function assuming that the environment alters
the shape of the production function. The second approach, following Battese
and Coelli (1995), assumes that environmental factors affect the degree of
technical inefficiency but not the shape of the production technology. The
first approach (the environment in the production function) produced
technical efficiency scores that are net of environmental factors. The
second approach (environment in the inefficiency equation) produces
technical efficiency scores that incorporate environmental factors. Coelli,
Perelman, and Romano (1999) has termed these gross technical efficiency
scores.
Battese, G. and T. J. Coelli (1995), "A Model for Technical Inefficiency
Effects in a Stochastic Frontier Production for Panel Data." Empirical
Economics 20.
Coelli, T.; Perelman, Sergio; and Elliot Romano (1999), "Accounting for
Environmental Influences in Stochastic Frontier Models: With Applications
to International Airlines." Journal of Productivity Analysis 11.
Good, D., Nadiri, M., Roller, L., Sickles R. (1993), "Efficiency and
Productivity Growth Comparisons of European and U.S. Air Carriers: A First
Look at the Data." The Journal of Productivity Analysis 4.
Kumbhakar, Subal and C.A. Lovell (2000), "Stochastic Frontier Analysis"
Scott
> -----Original Message-----
> From: [email protected] [mailto:owner-
> [email protected]] On Behalf Of Jeremy Whitridge Cheesman
> Sent: Monday, July 24, 2006 7:54 PM
> To: [email protected]
> Subject: st: help for frontier
>
> Hi,
>
> I am attempting to estimate a stochastic production frontier and te model
> using STATA. It is my first time estimating such a model. My SPF variables
> are dv= ln production (coffee yield in kgs) ivs= (ln) fertiliser, labor,
> irrigation, pesticides, irrigation frequency and plot level operating
> capital. Technical efficiency determinants are 1. whether the farmer is
> cropping coffee only 2. farm size 3. tree age and tree age^2 4. soil type
> 5. ln total wet season rainfall 6. some socio-eco characteristics.
>
> My problem is that I am unclear how to set up the correct model in stata.
> Specifically, I am unclear whether I include all the ivs - both spf and te
> variables in the depvar list or whether I include only the spf variables
> and then include the te variables following uhet. I am also unclear
> whether I should include lntotalrainfall in uhet or vhet. Pretty basic
> question I know. If someone could send an example with a small dataset
> that would be optimal.
>
> Many thanks,
> Jeremy
>
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