A Normal-Half Normal Distributed Stochastic Cost Frontier Model

Abstract

Stochastic Cost Frontier Model (SCFM) plays a major role in measuring Cost Efficiency Scores (CES) in the field of production. The present study is an attempt to derive the cost efficiency of normal half normal stochastic cost frontier model. The parameters were evaluated using Maximum likelihood Estimates. In the model ~ (0, ), is a two sided error term representing the statistical noise and ≥ 0 is one sided error term representing cost efficiency.