Estimating the materials balance condition: A stochastic frontier approach

摘要: In this paper we propose a stochastic formulation of the materials balance condition which imposes physical constraints on production technologies. The estimation model involves composed error term structure that is commonly applied in literature frontier analysis productive effciency. Moreover, discuss how OLS, maximum likelihood and Bayesian methods can be used to estimate proposed model. contrast previous approaches our allows limitations possibilities presence statistical noise depends substantially weaker data requirements. We demonstrate applicability new approach by estimating cndition for SO2 CO2 using sample fossil-fueled power plants United States.