Absolute Technical Efficiency Indices
Technical efficiency indices (TEIs) can be estimated using the traditional stochastic frontier analysis approach, which yields relative indices that do not allow self-interpretations. In this paper, we introduce a single-step estimation procedure for TEIs that eliminates the need to identify best practices and avoids imposing restrictive hypotheses on the error term. The resulting indices are absolute and allow for individual interpretation. In our model, we estimate a distance function using t…