Copyright © 2011 Subal C. Kumbhakar and Efthymios G. Tsionas. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper addresses some of the recent developments in efficiency measurement using stochastic frontier (SF) models in some selected areas. The following three issues are discussed in details. First, estimation of SF models with input-oriented technical efficiency. Second, estimation of latent class models to address technological heterogeneity as well as heterogeneity in economic behavior. Finally, estimation of SF models using local maximum likelihood method. Estimation of some of these models in the past was considered to be too difficult. We focus on the advances that have been made in recent years to estimate some of these so-called difficult models. We complement these with some developments in other areas as well.