Expected Efficiency Ranks From Parametric Stochastic Fronteir Models

In the stochastic frontier model we extend the multivariate probability statements of Horrace (2005) to calculate the conditional probability that a firm is any particular efficiency rank in the sample. From this we construct the conditional expected efficiency rank for each firm. Compared to the traditional ranked efficiency point estimates, firm-level conditional expected ranks are more informative about the degree of uncertainty of the ranking. The conditional expect ranks may be useful for empiricists. A Monte Carlo study and an empirical example are provided. Key Words: Efficiency estimation, Order statistics, Multivariate inference, Multiplicity JEL No. C12, C16, C44, D24